Week Ahead February 13th – 17th
EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on broad US dollar demand. The disappointing economic releases from the EU and the better than expected US economic releases brought the pair lower, entering into a technical negative bias. FED’s officials are signalling another 0.25% rate increase by May 2023 completing a total of 5% interest for the US Dollar. Geopolitical tension between EU and Russia and US with China is an additional factor behind last week’s US Dollar’s demand.
As for this week Traders and investors will mainly focus on the CPI number from the US. A higher than expected release will initiate a new wave of US Dollar demand and push the pair even lower. A lower than expected release will show that higher rates have started to have effect on inflation and will help the pair recover lost ground. From the Euro side the European commission releases for economic growth due to be released on Wednesday will paly a major role in Euro’s direction.
On the economic calendar, we have on Tuesday, European Gross domestic product pointing at 1.9% and US Consumer price index lower at 5.3% On Wednesday, US retail sales expected higher at 0.9%
Technically the picture is negative after last week’s downside move and close below 50%. In this week’s trading session if pair resumes the upside and breaks above 38.2% could change the picture to neutral and re-test 1.0860 Alternatively, if pair continues on the downside we are expecting to test 1.0620 (61.8%). Our traders are net long by 80% as many short sellers took profit their short positions and new buyers appeared between 1.0870 and 1.0700 targeting profits around 1.1000. We are expecting more aggressive buyers on the way down and short sellers to appear above 1.0900.
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session unchanged after mixed economic releases from the UK. Expectation for a higher rate increase in the UK has overshadowed FED’s signal for another 0.25% by May 2023. Traders and investors are closely following the strong presence and support of UK’s government in the Ukraine war with Russia and this weighs negative on economic growth as fears of escalation beyond Ukraine are increasing.
As for this week traders and investors will focus on CPI releases from both the US and the UK. A higher release will accelerate gains for either the US Dollar or the GBP as it will add pressure on both central banks to continue their aggressive rate increase policy.
On the economic calendar we have on Tuesday the UK ILO unemployment rate to remain unchanged at 3.7% and US Consumer price index lower at 5.3% On |Wednesday, UK consumer price index expected lower at 10.3% and US retail sales expected higher at 0.9% On Friday, UK retail sales expected higher at 1.8%
Technically the pair is neutral after its closed above 38.2% . As for this week if pair resumes the upside could retest 23.6%. Alternative if continues on the downside, will test 50% A break below 50% could accelerate losses and open the road for 1.1800. Buyers are standing firm at 1.2060 and 1.1960 targeting profits above 1.2200 We are expecting more aggressive buyers on the way down. New short sellers could appear at 1.2200 targeting profits at 1.2000
For more detailed economic calendar events please visit our live economic calendar on:
*The material does not contain an offer of, or solicitation for, a transaction in any financial instruments. 10tradefx accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all your invested capital, so please make sure that you fully understand the risks involved.