After a relatively quiet trading phase last week we are facing a more eventful week with inflation data and the Semi-annual Congressional testimony from Fed Chair Janet Yellen being more potent catalysts for larger market moves. Yellen gives her semi-annual Congressional testimony on Tuesday (Senate) and Wednesday (House) and traders will be listening closely for insights into the Fed's tightening plan and the idea of three rate hikes despite significant uncertainty over the outlook for U.S. fiscal policy.
Apart from the Fed's attitude, the release of U.K. Consumer Prices and Eurozone GDP figures will be interesting reports to watch on Tuesday. U.S. Consumer Prices and Retail Sales are due for release on Wednesday.
The euro weakened against the U.S. dollar and the single currency is now facing the 1.06-support level. The recent downtrend channel is still intact and for euro bears, there is no need for concern provided that the euro remains below 1.0665/1.07. For the euro to rally it would need to break above 1.0775 again and currently, we are a long way from that bullish scenario. If the Fed takes a more cautious tone, dashing hopes for a March rate hike, the euro might receive a small boost.
Based on the trend channel we expect lower targets to be around 1.0570/60.
The cable was slightly tilted to the downside. Important resistance-levels are still seen at 1.2550 and 1.26 and as long as the pound trades below these price levels we expect further losses towards 1.2350 and 1.2280. However, the recent sideways trend will not change until we see fresh highs above 1.2775 or on the other side, fresh lows below 1.2250.
This week may start off quiet as there are no major economic reports scheduled for release today. We wish you many profitable trades for the week ahead and a good start.
Here are our daily signal alerts:
EUR/USD
Long at 1.0670 SL 25 TP 20, 40
Short at 1.0589 SL 25 TP 30-40
GBP/USD
Long at 1.2525 SL 25 TP 17, 35
Short at 1.2470 SL 25 TP 30-40
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