The market shrugged off a thwarted coup attempt in Turkey last Friday. While prices slumped significantly towards the end of the previous trading week, most of the currency pairs recovered from their recent losses on early Monday. For Turkey’s President Erdoganthe amateurish takeover attempt came just at the right time, which Erdogan called “a gift from god”, giving him additional power to realize his plans to change Turkey’s political system. Critics accuse Erdogan of staging the coup himself in order to establish a kind of a one-party democracy, concentrating power in the presidency, rather than in parliament. Whatever the case, the market appeared unimpressed by the global turmoil, which is why we continue to focus on the technical picture.
The British pound tumbled towards 1.3130 and hit our profit target of 300 pips. The services we provide for subscribers include swing and long-term entries and one of these entries was, for example, a short-entry at 1.3480 in the GBP/USD which proved to be highly rewarding. We now focus on the support at 1.3120 and if sterling falls below that crucial support area we may see a decline towards 1.2960 and 1.29. On the topside traders should keep an eye on an upside break above 1.3340, which could invigorate fresh bullish momentum, sending the pound towards the resistance at 1.3480.
The euro dropped to a low of 1.1024 before it stabilized around 1.1070. From a technical perspective, the trend in the EUR/USD remains sideways as long as the price fluctuates between 1.1170 and 1.10. Above 1.1170 the sentiment could change in favor of the bulls, whereas a break below 1.10 and 1.0970 may reinvigorate bearish momentum.
The economic calendar this week is relatively light with the European Central Bank Rate Decision (Thursday) being the only main risk event for traders. While most market participants expect the ECB to maintain a stimulative bias on expectation that economic conditions in the eurozone will deteriorate by 2018, the central bank is not expected to change its monetary policy this month. Although we expect the euro to be vulnerable to further losses in the near-term, Thursday’s rate decision may fail to be a big market mover unless Mario Draghi will shock the market with an even more aggressive tone.
For sterling traders Tuesday’s Consumer Price report will be the most interesting piece of economic data releases.
We wish you a good start to the new week and many profitable trades.
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