The euro gained some traction against the British pound this past week, as the EUR/GBP pair broke an important short-term bearish trend line to trade close to 0.7980 level. There is a chance that the pair might correct lower in the near term, but it can be seen as a buying opportunity. So, buying dips in the short term should be favored.
There is a resistance around the 0.8000-10 level from where the pair might correct lower maybe towards the broken bearish trend line. So, if the pair corrects lower from the current levels or a bit higher levels and trades closer to the 0.7950-40 support level, then we can jump into a buy trade. Remember, the pair should hold the 0.7900 support level for this trade setup.
Initial target should be around the 0.8040 level, and final target could be around the 0.8080 level. Stop should be placed below the 0.7900 level.
Upcoming Events
The US Dollar finally corrected lower against few major currencies, including the Euro during this past week. The major economic releases were the Fed interest rate decision and the US nonfarm payrolls data. Both these event’s outcome were not as the market expected, and as a result the US dollar moved lower. The other loser this past week was the British pound, which also moved lower as the UK manufacturing PMI missed the expectation and declined more than expected. Overall, the major pairs like the EUR/USD and AUD/USD ended the week on the positive week.
Let us look at all major events lined up in the upcoming week.
Sunday – Australia’s retail sales data.
Monday – UK construction PMI, Euro zone PPI data and Australia’s trade balance data.
Tuesday – RBA interest rate decision, Spanish services PMI, Italian service PMI, German services PMI, Euro zone service PMI, UK services PMI US services PMI, US factory orders data, US ISM non-manufacturing PMI and Australia’s employment change data.
Wednesday –German factory orders, UK manufacturing production, UK industrial production, US trade balance data and Australia’s unemployment data.
Thursday – BOE interest rate decision, Canadian Ivey PMI and Chinese trade balance data.
Friday –Swiss unemployment data, German trade balance data, Canadian employment change data and Chinese CPI data.