Week ahead November 14th – 18th
EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session firm higher, as the US consumer price index dominated markets. The US consumer price index dropped to 6.8% lower than expectation and lower than the last number of 8.3% This resulted to aggressive US Dollar selloff as investors and traders waived any chance of a rate hike in FED’s next meeting. On the other side the EU inflation is firm higher and this generates a divergence between the two central banks.
As for this week market participants will mainly focus on the speeches from ECB’s officials with the main one in focus ECB’s president Christine Lagarde due to be delivered on Wednesday. Speeches will need to closely followed and gather information on how the central bank will react against persisting inflation. Given the recent economic releases on inflation, we are expecting all speeches to be hawkish. If this will happen then we can see pair trading higher.
On the economic calendar, we have on Tuesday, European Gross domestic product to remain unchanged at 3.5% On Wednesday, US retail sales expected higher at 0.9% On Thursday European Harmonized index of consumer prices to remain stable at 1.5%
Technically the picture is positive after last week’s close below 61.8% In this week’s trading session if pair continues on the upside and close above last week’s higher level could accelerate gains to full recovery of 100% Alternatively, if pair resumes the downside we are expecting to retest 1.0150 (50%). Buyers took profits at 1.0300 Short sellers are still open between 1.0030 – 1.0300 targeting profits at 0.9550 with stop losses above 1.0400 We are expecting new buyers around 1.0150 (50%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session firm higher on US Dollar’s selloff. The lower than expected CPI in the US waived any rate hike expectations in the next FED’s meeting and triggered a selloff in US Dollar, that helped GBPUSD pair benefit of the event and closed last week’s session higher.
As for this week market participants will focus on UK’s inflation number and many FED’s officials speeches. The heavy UK economic calendar will defy the next direction in the pair. FD’s speeches will confirm whether the central bank is done with rate hikes after inflation number cool down.
On the economic calendar we have on Tuesday, UK ILO unemployment rate to remain unchanged at 3.5% On Wednesday, UK consumer price index expected higher at 10.6% retail price index higher at 13.4% and US retail sales expected higher at 0.9% On Friday, UK retail sales are expected at -6.5%
Technically the pair is positive as the pair closed above 61.8% or (100% from old Fibonacci level). In this week’s trading session if pair manages to continue on the upside, will keep the overall picture positive and could open the road to more recovery up to 1.2200 Alternatively a reversal on the downside and a break below (61.8%) could retest 1.1590 (50%) Buyers at standing firm around 1.1350 targeting profits around 1.1900 Short sellers appeared at 1.1600 and 1.1740 targeting profits around 1.1550
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