Week Ahead May 27th – 31st
EURUSD pair closed last week’s trading session marginally lower. Monetary policy divergence between the two central banks is narrowing and this is keeping investors and traders on hold until fresh indications will come in regarding on which central bank will be the first that will reduce interest rates. Economic indicators from last week were better than expectations, although the speeches from Fed’s officials and the FOMC minutes, sent a dovish signal in the market. All FED’s officials agree that caution need to be in place as labor market is not yet strong enough and inflation is not yet showing signs of going down.
As for this week, traders and investors will mainly focus on the European inflation numbers. Harmonized index of consumer prices in the EU expected to show a higher print at 2.5% Any upbeat number will boost Euro as it will add pressure on ECB to keep interest rates higher for longer. A lower print in inflation, will trigger a selloff in Euro as the central bank’s probabilities in reducing interest rates in September will become higher.
On the economic calendar we have on Wednesday, German Harmonize index of Consumer price pointing higher at 2.8% On Thursday, US gross domestic product expected lower at 1.5% On Friday, European Harmonized index of consumer prices expected higher at 2.5% and US personal consumption expenditures unchanged at 0.3%
Technically the picture is neutral after last week’s close below (50%) at 1.0848 In this week’s trading session if pair trades on the upside will test 1.0950 If trades on the downside will test 1.0772 Our traders are sitting with sell positions opened at 1.0865 targeting profits below 1.0700 We are expecting more aggressive short positions on the way up and new long positions on the way down.
GBPUSD pair closed last week’s trading session higher on higher UK CPI number. Inflation in the UK came out higher than expectations at 3.9% and this boosted demand for GBP pushing the pair higher. The higher inflation will force BOE to maintain interest rates unchanged for longer. Fed’s officials and the FOMC minutes, sent a dovish signal in the market. All FED’s officials agree that caution need to be in place as labor market is not yet strong enough and inflation is not yet showing signs of going down.
As for this week, traders and investors will mainly focus on the speeches from both central banks’ officials. We do not expect any change in their language as all FED’s and BOE’s members will maintain their policy stance unchanged until inflation will come down to central banks’ target.
On the economic calendar we have on Thursday, US gross domestic product with expectations to be lower at 1.5% On Friday, US personal consumption expenditures to remain unchanged at 0.3%
Technically the pair’s overall picture is positive after last week’s close above (61.8%) at 1.2739 As for this week, if pair trades on the upside, will test 1.2800 Alternative, if trades on the downside, will test 1.2586 (50%) Our traders entered new short positions at 1.2720 targeting profits at 1.2600 we are expecting more aggressive short positions on the way up and ne long positions below 1.2600
For more detailed economic calendar events please visit our live economic calendar on:
https://tentrade.com/economic-calendar/
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