Week Ahead May 8 – 12
EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session unchanged after another choppy trading session. Both central banks the FED and the ECB hiked rates by 0.25% as it was widely expected. The dovish press conference after the FOMC pushed the pair higher as the FED has cleared that there will not be any more rate hikes, on the contrary, there is possibility for a rate cut in the future. The rally halted as soon as the next day when ECB also used a dovish comment on whether the central bank is willing to hike rates again.
As for this week, Traders and investors, will mainly focus on the economic releases from both sides with the main one the inflation numbers. Both central banks will closely monitor the inflation numbers before each of the monetary meeting, and this, will have the biggest influence on both central banks’ future rate decisions.
On the economic calendar, we have on Wednesday, German Harmonized index of consumer prices to remain unchanged at 7.6% and US Consumer price index higher at 5.8% On Friday, US Michigan consumer inflation expected lower at 63.
Technically the picture is positive after last week’s close above 23.6%. In this week’s trading session if pair continues on the upside will re-test 1.1070 peak of last week. If breaks and close above 1.1070 will open the road for 1.1200 Alternatively, if pair resumes downside we are expecting to re-test 1.0800 Our traders maintain open their short positions as of 1.0900 to 1.1030 targeting profits at 1.0700 We are expecting more aggressive short sellers on the way up and new buyers to appear at 1.0800 (38.2%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher on dovish FED comments. The central bank raised rates by o.25% as it was widely expected, although the dovish comments during the press conference highlighting that the FED is done with interest rates hike and now on the table is the rate cut, ignited a selloff in the US Dollar and help the pair trade higher.
As for this week, traders and investors will focus on the BOE rate decision. The central bank expected to hike rates by 0.25%. This is already priced-in into the pair and great attention need to be in place, on the comments of the press conference that will follow. If the central bank will follow the FED and ECB on stopping hiking rates the pair may face significant downside move. The heavy economic calendar in the UK will generate enough volatility during the week with many chances for traders to buy and sell the pair.
On the economic calendar we have on Tuesday, the UK BRC Like-for- Like retail sales pointing at 4.9% on Wednesday, US consumer price index expected higher at 5.8% On Thursday, BOE rate decision and press conference with a 0,25% rate hike. On Friday, UK Gross domestic product expected at 0.1% and Michigan consumer sentiment lower at 63
Technically the pair is positive after last week’s break and close on a higher level. As for this week if pair continues on the upside could test another 100pips higher at 1.2750 Alternative if resumes the downside, will retest Aprils lows at 1.2350 (23%) if breaks below 23.6% will retest 38.2% Short sellers are standing between 1.2200 – 1.2590 targeting profits at 1.2000 we are expecting more aggressive short sellers on the way up and new buyers to appear around 1.2200 targeting profits above 1.2500
For more detailed economic calendar events please visit our live economic calendar on:
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