2014.03.18 : FOREX TECHNICAL ANALYSIS: BEARISH PRESSURE IS BUILDING UP. FUNDAMENTALS HOLD CENTER-STAGE
EUR/USD
Forex Technical Analysis: Trading was affected last week by growing tensions regarding the Ukraine crisis which generated choppy price action and a lot of reversals. US economic data was mixed and contributed to the pair�s lack of clear direction.
Technical Outlook
The fact that bulls managed to keep price above 1.3830 for an entire week and also printed a new high at 1.3965, shows that the uptrend is still not exhausted. If this new high will be broken again this week, the next level of interest to the upside is the psychological resistance located at 1.4000 which is also a big round number and this kind of levels tend to have great importance for price action. Although the pair is in an uptrend, a move below 1.3830 would be proof of bear-strength and would make 1.3710 the next target of the week.
Fundamental Outlook
The first day of the week brings us the release of the Euro Zone Consumer Price Index which is the most important gauge of inflation but it tends to have a limited impact on the pair because the German CPI (which accounts for the major part of European inflation) was already released. Tuesday the German ZEW Economic Sentiment will be the main European event while the US will release the Consumer Price Index which, as mentioned before, has high inflationary implications.
Wednesday has the potential to be the most volatile day of the week and all eyes will be on the US for the release of the Interest Rate, FOMC�s Economic Projections and Fed Chairman Yellen�s Press Conference. The press conference is likely to be a huge market mover, especially in its second part when Janet Yellen will answer audience questions. The Fed will also decide whether they will further adjust the monetary stimulus program or not, an issue which has been a top concern of market participants and is likely to generate tremendous volatility.
Thursday the US Existing Home Sales and the Philly Fed Manufacturing Index are released, offering insights into the situation of the housing market and the progress of the manufacturing sector. The last important event of the week comes out Friday in the form of the Euro Zone Trade Balance which shows the difference between imported and exported goods. The impact of this indicator is not always high, especially if the actual number is close to the forecast.
GBP/USD
The beginning of last week was characterized by a strong move lower which took the pair close to 1.6600 support but for the rest of the week, the bears struggled without success to continue the move and break the mentioned level.
Technical Outlook
The balance of power starts to shift in favor of the bears although the pair is still in a range defined by 1.6750 resistance and 1.6600 support. Important to note is the fact that last week price moved up after a touch of 1.6600 but the bears quickly took it back down, resulting in a Daily pin candle (Thursday). Pin bars usually indicate rejection and in this particular case, a move south is expected, but the fundamental aspect of the week will have an important role and may change this scenario.
Fundamental Outlook
Bank of England Governor Mark Carney is scheduled to speak Tuesday in London at the Annual Mais Lecture. His speeches are potential market movers and the market often reacts to his attitude or to clues about future interest rates. Wednesday the Band of England will make public the Minutes of their latest Meeting; the Claimant Count Change which is released the same day will offer insights into the British jobs situation. These are the main events for the Pound but the pair will be directly affected by the US data released throughout the week.
Written by:
Bogdan Giulvezan
The article above is based on the writer�s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
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