Traders had to cope with a consolidation period last week which provided more losses than profits in terms of day trades amid a low volatility environment. As recommended, we didn’t invest much the past days and stood on the sidelines. The U.S. dollar was torn between falling and rising U.S. Treasury yields and finally ended the past week a little higher against the euro and British pound.
From a fundamental docket, euro and U.S. CPI are the most interesting reports this week. Euro area headline inflation is expected to drop sharply to 2.9 percent from 4.3 percent which could weigh negatively on the euro. Eurozone CPI is due on Friday. On Tuesday we will have the U.S. CPI report which could cause a hawkish repricing of interest rate expectations that would be bullish for the dollar.
The greenback remains favorable due in the current environment through a comparatively stronger economy as well as its safe haven allure amid the Middle East war.
The pair trades below the 200EMA which currently oscillates at 1.0735. We recommend traders to wait for a bullish breakout above 1.0760. On the downside, we would wait for a break below 1.0590 with a lower target at 1.0520. The price area between 1.05 and 1.0450 is seen a crucial support for the pair.
The cable finds itself still in a secondary upward channel. Based on this channel, we pencil in the 1.2150-area as a short-term support, whereas the 1.24-1.2470 zone as a resistance. Below 1.20 chances favor a bearish continuation.
The index recovered its recent losses and headed for 15450 (EMA200). Above 15600 we favor a bullish bias while below 14900, we will shift our focus to a lower target at 14300.
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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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