Ahead of the Easter weekend there are two key events to watch this week:
- U.S. President Joe Biden plans to unveil a further stimulus program with a tilt toward infrastructure. Biden will outline his plan in Pittsburgh on Wednesday, according to White House administration officials. Inflation expectations are likely to rise further following Biden’s announcement.
- On Good Friday the U.S. employment report for March is due for release and economists expect a big 500K job gain, which would bode well for the U.S. dollar. While the U.S. dollar may continue to appreciate ahead of Friday’s job report, volatility could be subdued towards the end of this week with most trading exchanges being closed for the Good Friday holiday, leading to illiquid market conditions.
With Europe heading towards a third Covid wave with an extension of restrictive measures, the Euro is expected to remain under pressure. Euro bulls looking for short-term pullbacks will watch out for an upside break of 1.1830 with a higher target at around 1.1870. If the euro falls below 1.1730 next lower targets will be at 1.17 and 1.1630.
As the EU economy is likely to recover later and less strongly from the pandemic than other countries, the euro will continue to weaken against other currencies.
GBP/USD: The British pound traded higher against the U.S. dollar last Friday but as long as the area around 1.3880-1.39 remains unbroken to the upside, bears could regain control in this pair. Bullish momentum seems to have subsided as of late, so we may see a period of consolidation now.
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