Welcome back to another exciting week that contains a series of high impact economic events, especially the ECB Policy decision, advance GDP and retail sales data from the United States says on the top of the list.
On Monday, the greenback edged higher as traders tempered their sentiments for deep U.S. interest rate cuts this month and heightened Middle East tensions supported safe-haven assets. The fundamental side is a bit lite today, which is why we may see the thin trading volume and volatility in the market.
Economic Events to Watch Today
EUR/USD – Daily Outlook
This week is very important for Euro pairs, as investor focus stays on the ECB Draghi speech. Mario Draghi is expected to sound dovish to support it’s struggling economic situations, thus keeping the Euro bearish.
We may experience choppy trading behaviour in the EUR/USD pair as it continues to trade sideways in these last few days. Although it spent the week within the previous one’s range, meeting bears near 1.1280 and staying above July’s low of 1.1192. For the pair, the week was all about central banks and monetary policy.
Key Trading Level: 1.123
EUR/USD – Trade Idea
On the technical side, the EUR/USD has gained strong support above 1.1200, the triple bottom level on the hourly timeframe. Above this, the EUR/USD has the potential to go after 1.1240.
While the bearish breakout of 1.1200 could lead EUR/USD pair towards 1.1170 and 1.1164 today. Let’s keep an eye on 1.1230 to stay bullish and bearish below this level for quick 30/50 pips movement.
GBP/USD – Daily Outlook
On Monday, the trading in British Pound Sterling (GBP) seems to be a bit muted as the market lacks top-tier economic events from global economies.
Sterling continues to drop to Brexit uncertainties and political risk encompassing the UK Prime Minister election. GBP vulnerability was repeatedly echoed by another week, keeping the GBP/USD bearish.
On the Brexit side, the German Chancellor Angela Merkel is the newest senior EU head to hint there was an opportunity for movement on the Irish backstop issue, a day following comparable remarks from Irish leader Leo Varadkar and Chief Brexit negotiator Michel Barnier.
Signs that there will be an opportunity for the incoming UK Prime Minister to consult on the subject has given a bid to Pound Sterling which has been under striking pressure over recent weeks.
Key Trading Level: 1.2509.
GBP/USD – Trade Idea
Looking at the GBP/USD from a wider perspective, you can see that the 1.2600 resistance has previously worked as a severe level of confluence. While extensive selling pressure prior in the month pushed the Pound beneath this technical level (1.2600), which seems to have violated the bullish trend line of its upward mounting over the last three years.
On the lower side, GBP/USD is now facing solid support at 1.2490, which marks the 38.2% Fibonacci support area. Violation of this support can extend bearish rally until 50% and 61.8% Fibo levels of 1.2470 and 1.2450 respectively.
Consider staying bullish above 1.2490 to target 1.2540. While bearish entry can be taken below 1.2485 to target 1.2450.
USD/JPY – Daily Outlook
At the end of the previous week, the Japanese currency pair USD/JPY flirted with the 108.00 level amid resumed demand for the greenback. However, the pair retreated distinctly from that level to settle at around 107.70.
The late drop was a compound of falling US indexes, piercingly down on Friday on waning hopes for aggressive US rate cuts, and boosted risk aversion on news that Iran seized a UK oil tanker,
The optimistic headline was dominated by declining imports, a result of the trade war lead by the US. Today on Monday, the BOJ’s Governor Kuroda is due to speak at the IMF in Washington and investors will be monitoring him for further clues about the economy.
Key Trading Level: 107.75
USD/JPY – Trade Idea
Let’s keep an eye on 108 as the bearish trendline is keeping the USD/JPY lower below this level. In case of a bullish breakout, we may have a chance to go long on USD/JPY until 108.350. On the lower side, USD/JPY can stay bearish below 108, until 107.600 and 107.250 support area.
All the best and have a profitable week ahead!