EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher, on easing global geopolitical turmoil. While markets continue to digest the war in Ukraine, investors are abandoning the safe haven US dollar and turning into equity markets. The rhetoric of ECB on a rate hike as soon as in July meeting will continue dominating the pair for now with more recover to come, in the next sessions.
As for this week market participants will mainly focus on the US non-farm payroll number. The better than expected number could trigger new buyers into the US Dollar and bring the pair back to the downside. Although, inflation numbers are the main factors behind any price action. From the geopolitical point of view, Turkey will host the new round of talks between Russia and Ukraine. The two parts expected to agree on a ground sharing that will end the war. Of course, at this stage is too early to hope for such solution. With the Joining of Sweden and Finland in NATO things could derail at any time, and escalating the war into Europe. The reopening of black sea ports will let the wheat flow outside Ukraine and this is something that will help prices and inflation in the long term.
On The economic calendar, we have on Monday, German Harmonized index of consumer prices pointing higher at 8% On Tuesday, European Inflation expected higher at 7.7% On Wednesday, German retail sales expected higher at 4% and US ISM Manufacturing PMI lower at 54.5 On Thursday, ADP employment expected to add 280K new jobs. On Friday, European retail sales expected higher at 5.4% and US non-farm payroll to add 310K new jobs.
Technically the picture is neutral after the pair retreated higher as we have expected. Last week’s positive trading session pushed the pair higher and closed just below 38.2% In this week’s trading session if pair breaks and closes below 1.0350 (23.6%) will accelerate losses down to 1.0350. If pair manage to maintain recovery and close above (38.2%) could change the picture to positive and test next level of 1.0900 (50%). Our traders are net 100% long with positions opened between 1.1350 to 1.0500 targeting profits above 1.1350 We are expecting more aggressive long positions on the way down. Alternative if pair continues trading on the upside, we are expecting short sellers to appear around 1.1090 (61.8%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher on easing geopolitical tensions. The lack of any Brexit news on the Northern Ireland protocol and sell-off of the US Dollar help the GBP to recover more lost ground. Investors are now turning into equity markets as equities started to recover and this could help the pair recover more ground in the coming sessions. The UK government, in its fight to compact inflation, announced a plan to help low income families with a payment of 650£ although, the news did not had any impact on the pair.
As for this week market participants will be focus on the Non-farm payroll number where is expected to add 310K new jobs. From the UK side the lack of any high impact economic events will let the pair trading in the faith of its counterpart US Dollar.
On the economic calendar we have on Wednesday, the UK Manufacturing PMI to remain unchanged at 54.6 and US ISM Manufacturing PMI lower at 54.5 On Thursday, US ADP employment expected to add 280K new jobs. On Friday, US non-farm payroll to add 310K new jobs.
Technically the pair is neutral after last week’s upside move and close below 38.2%. Pair managed to recover more lost ground as it was expected. In this week’s trading session if pair continues recovering on the upside and breaks above 38.2% we are expecting to test 1.2900 (50%) Alternatively if pair resumes the downside a break below (23.6%) could accelerate losses down to 1.2200 Our traders are net long 100% with positions opened between 1.3412 to 1.2700 targeting profits above 1.3400 We are expecting new buyers on the way down and short sellers to appear around 1.3170
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