EUR/USD: The euro stays above 1.05 after a choppy Friday
(Vasilis Tsaprounis – TopFX)
The single European currency remains firmly above the 1,05 level in the first trading hours of the new week having retreated slightly from the highs of 1,0580 that were marked during the Asian zone.
Friday was a tumultuous day in trading as there was sharp volatility in both directions following the US new jobs announcement which surprised analysts as it rose to 263,000 from the 200,000 expected.
The initial reaction was a sharp drop for the Euro, almost 100 basis points in just the first minutes of the announcement with the pair pulling back from the 1,0540 level to the 1,0440.
However, the US currency was unable to maintain the gains and the temporary positive momentum, with the result that the exchange rate returned relatively soon above the level of 1,05 again, where it remained until the closing of the week.
As I mentioned in Friday’s article I was giving a high probability that the US currency would return to some gains which were partially confirmed.
While the strong jobs news created this outlook, wiping out all the gains in such a short period of time was unexpected and surprised me.
Apparently, the market was not convinced by the latest development and remains quite cautious about the next Fed’s decision for an interest rate hike for which the probabilities give more than 80% that Fed will decide on 50 basis points and not by 75 which was the most likely a few weeks ago.
The start of the new week have quite a rich calendar of macroeconomic announcements with retail sales in the Eurozone and manufacturing and services price indices in Europe and the US being awaited with particular interest by investors.
It would be a surprise for me if all the economic data continues to support the European currency so that it can maintain current levels and create prospects for a further rise.
Although the possibility of seeing some new peaks still exists, I would not hold positions in favor of the European currency at these levels and would expect some new dips.
A rich agenda of announcements could again provide high volatility with the pair remaining susceptible to corrections in favor of the US currency.
GBP/USD Forecast: Pound Sterling faces near-term consolidation
(Eren Sengezer – FXStreet)
– GBP/USD has gone into a consolidation phase near 1.2300.
– US Dollar could hold its ground if markets turn cautious.
– The pound Sterling continues to trade above key support levels.
GBP/USD has lost its bullish momentum after having touched its highest level in over five months at 1.2345 during the European trading hours on Monday. The pair’s near-term technical outlook suggests that the bullish bias stays intact but the Pound Sterling could have a hard time gathering strength if the market mood sours during the American trading hours.
With several cities in China deciding to ease coronavirus curbs over the weekend, risk flows dominated the financial markets at the beginning of the week and the US Dollar struggled to find demand. Nevertheless, US stock index futures are down between 0.2% and 0.3% during the European trading hours, suggesting that investors could adopt a cautious stance if Wall Street’s main indexes start the week in negative territory.
There won’t be any high-impact macroeconomic data releases from the UK and the US Dollar’s market valuation is likely to continue to drive the pair’s action.
The US economic docket will feature the ISM’s Services PMI report on Monday. The inflation component of the survey, the Prices Paid Index, is forecast to rise to 73.6 in November from 70.7 in October. If the report shows that input price inflation in the service sector continued to rise at an accelerating pace, the US Dollar could stay resilient against its rivals and weigh on GBP/USD. The headline PMI is expected to edge lower to 53.1 from 54.4. A reading below 50 is likely to trigger a fresh US Dollar selloff and provide a boost to the pair.
GBP/USD Technical Analysis
GBP/USD continues to trade within the ascending regression channel coming from November 9 and the Relative Strength Index (RSI) indicator on the four-hour chart holds comfortably above 60, confirming the bullish bias.
On the upside, interim resistance seems to have formed at 1.2345/50 (daily high, upper limit of the ascending channel) ahead of 1.2400 (psychological level) and 1.2475 (static level, former support).
In case GBP/USD falls below 1.2240 (mid-point of the ascending channel), it could extend its correction toward 1.2200 (psychological level, 20-period Simple Moving Average (SMA)) and 1.2150 (200-day SMA, lower limit of the ascending channel).
GBP/AUD vs shaped reversal
GBP/AUD technical analysis
- V-shaped reversal.
- Ascending trend line rejection.
- Weekly support.
- The target is W.
H3 MEGATREND MAs: Bullish
H4 chart GBP/AUD
1. Double top.
2. Ascending trend line.
3. Entry zone.
4. Target.
The GBP/AUD has made 156 pips in the last 14 days. It makes it a moderately volatile market and we can see that the scenario that I have been trading lately – buying the dips scenario.
We have PMI news today and the GBP could drop but after a drop, we might be seeing a bounce again. We use the news to get a better price for a trade!
The entry zone is 1.8050. We should see a move up from the entry zone and if the PMI data comes worse than expected then buying the dips will be another scenario if the price drops. Anyway, the market always follows trends and we should see the price moving up from the zone. We also have CBR emerging pattern so we should see a possible retest of 1.8083 and further continuation up toward the target. This analysis, all the patterns, and all entry signals and targets are a part of the Megatrend system and a trading course. My Telegram group recently received 1 long signal on GBP/AUD. The trade is a part of a daily time frame that is clear and concise.
