Both of our major currency pairs EUR/USD and GBP/USD closed out the last week with a relatively narrow trading range. The cable remained close to 1.40 amidst less negative Brexit headlines but still refrained from a sustained break above that crucial threshold. At the beginning of this week we see the pound performing quite resiliently around 1.40 and it will be interesting whether the currency is able to appreciate further, heading towards a break of 1.4030 in the GBP/USD. A break above 1.4030/40 could spur bullish momentum towards 1.41 and 1.42. A current support is however seen at 1.39.
The euro remained range-bound between 1.2350 and 1.2280 in short-term time frames while being confined to a price range between 1.2550 (double top) and 1.22 in larger time frames. Thus, the technical outlook has not changed and we recommend euro traders waiting for price breaks above or below these ranges.
The muted price development of last week could come to an end this week
as we have some event risks ahead that could provide motivation. We have
new Federal Reserve Chairman Jerome Powell testifying on the
semi-annual monetary policy report before Congress (Tuesday and
Thursday). Powell’s first public appearance as new Fed Chair will likely
be watched closely with investors looking for hints about the Fed’s
monetary policy guidance. Powell will testify on the economy and
monetary policy and if he gets specific on rate hikes and emphasizes the
potential need of even 4 rate hikes this year, the dollar could rally.
If he, however, refrains from providing specific guidance on what to
expect from the Fed (most likely scenario before the Fed’s next meeting
on March 20-21), the dollar could be losing ground against its major
For Sterling traders, U.K. Prime Minister Theresa May’s speech on Friday will be the main event of the week.
Today, ECB President Mario Draghi is scheduled to speak in Brussels at 14:00 UTC.
Apart from speeches and testimonies, the U.S. PCE deflator and ISM Index (Thursday) could be important to watch.
Here are our daily signal alerts:
Daily Forex Signals:
GBPUSD: We are currently long @ 1.4030 and have already reached our first profit target. Now let's go for the larger TP...
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