Week Ahead February 27th – March 3rd
EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on better than expected US economic releases and hawkish FOMC minutes. The pair resumed its downside move during last week’s trading session as traders and investors are pricing-in 0.5% rate hike in the next FED meeting. There were no comments from ECB’s officials regarding any rate hike in their future policy and this let the pair in the mercy of US Dollar.
As for this week, Traders and investors, will mainly focus on the economic calendar and the speeches from both ECB’s and FED’s officials. We are estimating that current EURUSD exchange rate is already fully priced-in the 0.5% rate hike, and we are expecting the pair to recover some lost ground during this week’s trading session.
On the economic calendar, we have on Monday the European consumer confidence pointing at -19 and US Durable goods orders pointing lower at -4% On Wednesday, German Harmonized index of consumer prices expected higher at 9.6% and US ISM manufacturing PMI higher at 48 On Thursday, European Harmonized index of consumer prices expected at 8.6% On Friday, European composite PMI expected at 53 and US ISM services PMI lower at 52.4
Technically the picture is negative after last week’s downside move and closed below 61.8%. In this week’s trading session if pair resumes upside and breaks above 61.8% could change the picture to neutral and re-test 1.0700 Alternatively, if pair continues on the downside we are expecting to test 1.0350 (100%). Our traders are net long with buyers standing between 1.0870 and 1.0600 targeting profits around 1.1000. We are expecting more aggressive buyers on the way down and short sellers to appear above 1.0800.
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on better than expected US economic releases. the hawkish FED minutes fueled US Dollar’s demand as investors and traders continued to priced-in another 0.5% rate hike on next FED meeting. Failed deal over Northern Ireland boarder talks, between UK and EU are weighted negative on the pair as investors were more optimistic that a deal could be achieved last week. The dovish comments from BOE’s officials was an additional reason behind last week’s drop to three months lower levels.
As for this week traders and investors will focus on the economic calendar and mostly the speech form BOE Governor Bailey. The postponed meeting between UK and EU and UK and Scotland’s DUP could bring some light on the Northern Ireland boarder talks and help the pair recover lost ground. we are estimating that the 0.5% rate hike on US dollar is already fully priced-in and a recovery on the pair could be around the corner.
On the economic calendar we have on Monday the US Durable goods orders pointing lower at -4% On Wednesday, UK Manufacturing PMI to remain unchanged at 49.2 and US ISM manufacturing PMI higher at 48 On Friday, UK composite PMI expected at 50.2 and US ISM services PMI lower at 52.4
Technically the pair is negative after closed on the 50% level. As for this week if pair resumes the upside could retest 38.2%. Alternative if continues on the downside, and breaks below 50% will open the road to 61.8% Buyers are standing firm between 1.2060 and 1.1950 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
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