We welcome you to a new trading week and the last one of November. The euro was the best performing currency last Friday despite the liquidity drain and last week's bullish breakouts in both major currency pairs EUR/USD and GBP/USD attract investors’ attention now as they could point to bullish conditions until year-end.
Before we come to the technical analysis, we take a look at this week’s economic calendar which is relatively light in terms of market-moving data. As for the U.S. dollar, the progress of the U.S. tax reform will be front and center. There are deep divides within the Senate, leading to a high degree of uncertainty. In the absence of progress on key issues of the reform plan the dollar could remain under pressure.
The most interesting piece of U.S. economic data will be Wednesday’s GDP report but more attention will be paid to the speeches by Janet Yellen and Jerome Powell. On Tuesday, Powell testifies at the Confirmation Hearing before the Senate and he could be asked for its views on the economy and outlook. Outgoing Yellen appears before the Joint Economic Committee of Congress one day later.
On the Eurozone economic data front, Thursday’s Consumer Price report will receive most attention. Inflation is trending higher but with the euro trading already at high levels, the ECB is in no rush to taper the pace of its asset purchases anytime soon.
The euro ended the last week in positive territory and with the daily close above 1.1910 it is likely that we now see further gains towards 1.20. As noted in previous analysis a sustained break above 1.19 was needed to encourage euro bulls for a test of 1.20 and possibly even the September high of 1.2092. If the euro falls back towards 1.18, euro bulls might take the opportunity to buy euros at lower levels. Euro bears should however wait for a renewed break below 1.17.
The short-lived break above 1.3350 proved unsuccessful, at least for the moment. Whether there will be a run for 1.34 remains to be seen and hinges on the risk appetite for sterling amid Brexit talks. For the time being we favor a bullish stance targeting at 1.34 and 1.3450. If the pound drops back below 1.3250 the bias could shift slightly in favor of the bears.
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Daily Forex Signals:
Long @ 1.3335 SL 25 TP 20, 50 Trade has already hit our first profit target
Short @ 1.3290 SL 25 TP 15, 40
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