Choppy price action gives investors a hard time at the end of last week

General market theme
Volatility in the financial markets was elevated during the final 24 hours of last week and the major financial instruments we’re monitoring in this newsletter showed quite an active behavior ahead of the weekend. However even though we saw attractive price action the uncertainty that has characterized the markets recently meant that again there was a lack of follow-through and changes in direction.

Going into this week we should expect more interesting price action as we will have the opportunity to tackle important fundamental and news events. The Non-Farm Payrolls report from the US at the end of the week and the UK PMI levels might be the important reports but at the same time news from China and the end of the G20 meeting in Shanghai will all provide traders with fresh data to plan their trades. February was a hard month like January and market participants’ incentive to make up for them will be high during March.

Price action highlights
The Euro broke below the 1.1000 level on Friday and the momentum that followed drove the currency almost to the 1.0900 area. There was little on the news to suggest that so we need to approach this development from a technical standpoint, we have always advised in favor of more losses for the Euro that has been remaining afloat only due to Dollar’s weakness. At this time the Euro is recovering around the 1.0950 area and its outlook will be decided by whether the Dollar can pick up pace, if this is the case then we should expect more losses for the Single currency.

The Cable was rather unstable on Friday and even though the day started with an attempt to claw back some the ground it had lost earlier in the week the British currency reversed quickly and declined below the 1.4000 area again. The decline dragged the Pound below the 1.3900 area as well but given the bias that there is for the Pound we would have expected more losses proving that again traders are hesitating to back the Dollar at this point. However as long as Brexit remains on the agenda the bias is negative and a potential uptick in Dollar’s outlook would mean more losses for the Pound this week.

Focus of the day
Today we should expect a slow start for the week, the only piece of news on the calendar are the release of the Net Consumer Credit and the Eurozone inflation levels so we wouldn’t expect too much price action and volatility for the next 24 hours.