Week Ahead March 27th – 31st
Pair closed last week’s trading session higher on disappointing FED’s interest rate decision and comments. As it was widely expected the FED increased rates by only 0.25%. Although the comments that followed during the press conference were taken as dovish by market participants whiled the central bank failed to provide any clear evidence whether it will continue to hiking rates or not. FED’s officials let mixed signals around the market keeping investor and traders on hold. On the other hand, ECB is keeping its hawkish tone signalling another 0.5% rate increase
As for this week, Traders and investors, will mainly focus on the inflation numbers from Germany and Europe. A higher number will boost the pair on the upside as it will reinforced rate hike expectations in Eurozone. A lower than expected inflation number will keep the pair on the downside, as it will forced the ECB to reconsider their rate policy.
On the economic calendar, we have on Monday the German IFO Business climate pointing lower at 90.9 on Wednesday, German Gfk consumer confidence lower at -33.1On Thursday, German Harmonized index of consumer prices higher at 9.4% US Gross domestic product to remain unchanged at 2.7% On Friday, German retail sales expected at -5.2% European Harmonized index of consumer prices at 7.2% and US Michigan consumer sentiment at 63.4
Technically the picture is neutral after last week’s close just on 38.2%. In this week’s trading session if pair continues on the downside and breaks below 50% could change the picture to negative and re-test 1.0611 Alternatively, if pair resumes upside we are expecting to re-test 1.0900 Our traders are sitting on the side after all long positions have been taken profit during last week’s rally. We are expecting new buyers at 1.0700 targeting profits above 1.0900 and new short sellers at 1.0900 targeting profits at 1.0700
Pair closed last week’s trading session higher on upbeat economic releases from the UK and on US Dollar rate hike of 0.25%. BOE maintained a hawkish tone regarding future policy as they highlighted that if inflation will persist BOE will need to continue increasing rates. Divergence grow between the two central banks as the FED used a Dovish tone daring their press release, failing to provide any signals for more rate hikes. Although pair retreated from its rally during Friday’s session and this was mostly due to a technical correction.
As for this week traders and investors will focus on both central banks’ officials’ speeches during the week. Both sides will give signals on their future policy. The main event behind this week’s trading opportunity will be the US inflation number. This will defy FED’s next rate decision and trader will jump in to take the chance for farther GBPUSD downside move.
On the economic calendar we have on Thursday, US Gross domestic product standing at 2.7% On Friday UK gross domestic product at 0% and US Michigan consumer sentiment at 62.4
Technically the pair is positive after last week’s close above 23.6% level. As for this week if pair continues on the upside and break above last week’s peak of 1.2330 could open the road for 1.2400 Alternative if resumes the downside, and breaks below 23.6% will retest 38.2% Short sellers are standing at 1.2200 and above targeting profits at 1.2000 we are expecting more aggressive short sellers on the way up and new buyers to appear around 1.2064 targeting profits above 1.2200
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