We welcome you to a new trading week which could prove to be more interesting than the last one. We have plenty of economic data releases and monetary policy speak on tap this week but most action could take place on Tuesday. A round table discussion is being held on Tuesday in Frankfurt with ECB President Mario Draghi, Fed Chair Janet Yellen and BoE Governor Carney all scheduled to speak. On the same day, we also have the U.K. Consumer Price report and Eurozone GDP reading due for release. The following day, U.S. CPI and retail sales statistics will be in focus with economists expecting softer readings. If CPI misses, the chances of a Fed December rate hike decrease.
Apart from top-tier economic data releases, the U.S. tax reform bill will keep the dollar trade in play. Continuing talks on tax legislation in the U.S. Congress are weighing on the U.S. dollar but investors still hope for a happy ending in the tax reform saga. The tax legislation will play into the Federal Reserve’s decision whether to raise interest rates next month. Thus, any new headlines from Washington DC should affect the greenback’s price action.
The biggest story at the start of the trading week was the sharp decline of the British pound which came under increased selling pressure after a report showed that as many as 40 Conservative Party MPs agreed to sign a letter of no confidence to Prime Minister Theresa May, indicating the possibility of a change in leadership.
GBP/USD
The pound dropped back into its former trading range between 1.3165 – 1.31 that has limited the pair’s price action before a small bullish breakout occurred last Friday. It will now be interesting whether the cable is primed for breakout of its recent uptrend channel. If the pound falls below 1.3085 we expect accelerated bearish momentum towards 1.3025 and 1.30.
EUR/USD
The euro continues to hover around the neckline of the head-shoulders pattern at 1.1670. Euro bulls are still facing several hurdles before the sentiment brightens. Next resistances are coming in at 1.1725 and 1.1780 and as long as these barriers remain unbroken we may see the euro being accompanied by a bearish tilt.
Here are our daily signal alerts:
EUR/USD
Long at 1.1680 SL 25 TP 20, 40
Short at 1.1630 SL 25 TP 15, 30
GBP/USD
Long at 1.3192 SL 25 TP 20, 50
Short at 1.3085 SL 25 TP 30-40
We wish you good trades and many pips!
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