Monday, 18 February 2019
EUR/USD
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fundamental review
The trading week for the EUR / USD pair was very hard. Several times, the single European currency was close to updating the trade lows for 2018, but due to a series of weak economic reports from the US, as well as positive news from Beijing and Washington, buyers managed to keep the price above the level of 1.12.
The main problems of the European currency are still associated with the weakening of the region's economy. The latest statistics show that the main trend is still negative, which also leads to aggravation of internal political problems. Additional pressure on the currency pair is being caused by the risks associated with Brexit, since in case of an uncontrolled British exit from the EU, serious economic problems can be inflicted on the key countries of the region - France and Germany. Last week, research data were cited, which showed that in case of a “tough” Brexit, up to 100,000 jobs could be under threat in Germany, and in France there would be half as many. The topic of the possible introduction of increased duties on European cars by the United States is being actively discussed now. These prospects do not add optimism for the investors. These restrictive measures will primarily hit the main economy of the EU - Germany, which is now not in the best condition and in the fourth quarter of 2018 showed a 0.0% growth in GDP.
For the dollar, the main blow last week was the data of internal statistics, which unexpectedly turned out to be significantly lower than anticipated. In addition the positive results of the next round of negotiations between Beijing and Washington reduce the interest in the dollar as a protective asset against trading risks.
Next week, investors will carefully study the new statistical information from Europe, trying to assess the real situation in the EU. For the dollar, the main topics of the week will continue to be the US and Chinese negotiations, domestic statistics and the Fed policy.
On Monday there is a celebration of President’s Day in USA. All financial markets of the country will be closed, which adversely affects the volatility and liquidity of the markets.
On Tuesday, US traders will return on the market again, but the focus of investors will mainly be on news from Europe, where the ZEW Institute will publish its indices for Germany. Also the same day the speech of the ECB member Prath is scheduled.
The main event of Wednesday should be the publication of the minutes of the January FOMC meeting.
On Thursday, a large block of economic statistics will be released from the USA and Europe. The EU will present preliminary data on PMI production and services sectors. The minutes of the last ECB meeting will also be published.
In the United States, on this day, will be released data of preliminary PMI for the manufacturing and service sectors, orders for durable goods, data on the secondary housing market and other less important economic data.
On Friday, investors will focus on fourth-quarter GDP data in Germany, the IFO business climate index for Germany, updated inflation data in the EU, and Mario Draghi's speech at the event in Bologna.
The same day in the United States the forum dedicated to the monetary policy of the Fed will take place. Some heads of the Federal Reserve Bank will speak.
On the chart, despite the local correction, the situation for the EUR / USD pair remains very difficult. At lower time intervals, a bearish trend is clearly dominant, indicating a likely downward continuation. On the daily chart, we also notice the presence of signals in favor of the development of a downward movement and a high probability of updating the local minimum at 1.1200. Therefore, correctional growth is seen as a good opportunity to increase short positions.
Resistance Levels: 1.1315, 1.1350, 1.1400.
Levels of support: 1.1290, 1.1260, 1.1200.
The main scenario is the building of a reversal formation in the range 1.1315-1.1330.
An alternative scenario - fixing prices above 1.1315 and the continuation of corrective growth.
The chart is dominated by bearish signals. The fundamental background also remains negative. Therefore, preference is given to short positions that can be opened already at the level of 1.1315.
FortFS
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