Weekly Forex Analysis: February 6th to 19th 2017


EUR/USD

 

Weekly Analysis: U.S. data released throughout last week was mostly bearish and the Fed kept the rate unchanged, without hinting about a March hike. Also the NFP report showed more jobs but with a lower hourly wage and this increased market confusion.

Technical Outlook

 

The pair is under pressure and struggling to decide the next direction; Thursday’s candle has a long upper wick while Friday’s candle has a long lower wick, both showing opposing signals and an unstable environment. The support at 1.0710 rejected price higher but 1.0800 resistance pushed it lower after a brief climb above, so these will be the levels to watch early in the week; a break of either one will likely generate an extended move in that direction. The 50 period Exponential Moving Average is still angled upwards and below price, thus making the bias bullish but the up move is becoming more and more fragile.

 

Fundamental Outlook

 

The first two days of the week are quiet, without major economic announcements but Wednesday United Kingdom’s Parliament will vote to decide if they will confer power to the Prime Minister to trigger Article 50; this will likely affect the EUR/USD pair as well.

Thursday the U.S. Unemployment Claims are the only notable event and the week ends Friday with the release of the University of Michigan Consumer Sentiment, a survey that tries to gauge the opinions of about 500 respondents regarding current and future economic conditions. The survey acts as a leading indicator of consumer spending, which in turn represents a major part of the entire economic activity.

 

GBP/USD

 

The Pound-Dollar showed mixed behavior last week, first climbing to establish a new high and then dropping to the levels seen at the beginning of the week. Most of Pound’s losses occurred when the Bank of England released the Inflation Report and Governor Carney adopted a cautious stance.

Technical Outlook

 

The move up seen during the last weeks seems to have hit a dead end as the bulls failed to decisively break the previous high and to touch 1.2750 resistance. Currently the bears are testing 1.2420 support, with the 50 period Exponential Moving Average in close vicinity; if this confluence zone will be broken early during the week, then the bears are likely to regain control of the pair but a failed attempt would make 1.2750 the target for the week.

 

Fundamental Outlook

 

The first highlight of the week ahead is the EU Membership Vote, scheduled Wednesday. The Parliament will decide if they give power to the Prime Minister to notify the European Union about UK’s intention to leave the union, by invoking Article 50 of the Lisbon Treaty. Volatility will probably increase and we recommend caution throughout the day, especially because the exact time of the vote is not yet known. Please note that the date may change as well.

Friday the British Manufacturing Production will show changes in the total value of goods produced by the manufacturing sector and the same day NIESR will release an estimate of the British Gross Domestic Product. Overall we have a slow week ahead, with the EU Membership Vote being the key event.

 

Written by: Bogdan Giulvezan