Welcome to a new trading week everyone.
Last week was none of our favorite trading weeks since both of our currency pairs have taken a breather and remained within tight sideways trading ranges. The EUR/USD remained stuck between 1.0620 and 1.0520 while the GBP/USD hovered around 1.21.
More volatility was however seen in the DAX which fell towards 14770 and thus hit the lower descending trendline of its recent downtrend channel. Based on that channel we may see some pullback towards 15150 in the next days but if 14700 breaks to the downside, bearish momentum could accelerate towards 14500.
What is in store this week?
While the big elephant in the room will be escalating tensions in the Middle East, the key focus is on the European Central Bank rate decision on Thursday. The ECB is expected to remain on hold and keep interest rates unchanged but could stress that rates will stay high for an extended period. If ECB President Christine Lagarde signals that this pause could mean the conclusion of the bank’s aggressive tightening campaign, the euro will fall against the U.S. dollar. If, on the other side, Lagarde leaves the door open for another rate hike at a later date, the EUR/USD could recover towards 1.07.
Furthermore, the U.S. PCE Price Index is scheduled for release on Friday.
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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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