Week ahead July 4th – 8th
EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on weaker Euro after the mixed inflation data kept traders on a wait to see mode regarding ECB’s July rate decision. The lower than expected Core CPI in the EU erased a huge percentage probability of the 0.5% rate hike expectations in ECB’s July meeting, leaving traders to guess whether it will be appropriate a rate hike in July or not. The selloff in equity markets is renewing recession fears and drove investors into save heaven US Dollar adding downside pressure on the pair.
As for this week market participants will mainly focus on the FOMC minutes, due to be released on Wednesday. No rate hike is expected at this meeting although the language that will be used will guide investors into what’s next in the central bank’s future path. The US nonfarm payroll will most probable dominate the pair by the end of the week and the sessions to be followed.
On the economic calendar, we have on Tuesday the European services PMI to remain unchanged at 53.1 On Wednesday, European retail sales expected higher at 5.4% US ISM services PMI lower at 54.5 On Thursday, ADP Employment expected to show an additional 200K new jobs On Friday, Nonfarm payrolls to show an additional 250K new jobs with the average hourly earnings steady at 0.3%
Technically the picture is negative after last week’s closed just above 0% on year’s lower levels. In this week’s trading session if pair breaks below 1.0350 will accelerate losses down to 1.0250. If pair manage to recover and close above (23.6%) could change the picture back to neutral and test next level of 1.0800 (38.2%). Our traders are net 100% long with positions opened between 1.1350 to 1.0350 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 1.0800 (38.2%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on weaker GBP after EU’s officials’ comments, that the negative impact from BEXIT has just started to be felt. The US Dollar’s strength on demand of save haven asset is another factor behind GBPUSD’s recent downside pressure. Investors and traders are turning into save haven assets like the US Dollar as equity markets selloff renew fears of recession.
As for this week market participant will focus on the FOMC minutes due to be released on Wednesday, and the nonfarm payroll number in the US. The central bank is not expected to hike rates on this meeting, although, the comments will guide investors on what’s next. The lack of any high impact economic events in the UK will let the pair expose on US Dollar’s heavy economic calendar.
On the economic calendar we have on Tuesday, UK composite PMI to remain the same at 53.1 On Wednesday, US ISM services PMI lower at 54.5 On Thursday, ADP Employment expected to show an additional 200K new jobs. On Friday, Nonfarm payroll to show an additional 250K new jobs, with the average hourly earnings steady at 0.3%.
Technically the pair is negative after last week’s close just above 0%. In this week’s trading session if pair manages to recover on the upside, we are expecting to test 1.2300 (23.6%) Alternatively if pair continues on the downside and break below 0% could accelerate losses down to 1.1900 Our traders are net long 100% with positions opened between 1.3412 to 1.1950 targeting profits above 1.3400 We are expecting more aggressive buyers on the way down and short sellers to appear around 1.2625
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