Alpesh Patel
InvestingBetter.com
General market theme
Last week’s price action has baffled traders that are watching the major instruments struggling to find momentum and decide on a single direction. The latest round of bearish reports from the major economies has fueled a lack of confidence in their respective currencies and that can be seen on the way the Forex pairs are trading.
This week we can expect further volatility and until traders get a clearer view of where the majors are heading this choppy price action will continue. The Fed meeting on monetary policy will be the event of the week, there will be no press conference or changes in the rate policy but the press statement itself can set the tone regarding Dollar’s performance for the next month.
Price action highlights
Price action remained choppy as we mentioned above and on Friday the Euro ended the week just below the 1.0800 level near its recent lows. The lower PMI readings put the Single currency under more pressure however as long as the Dollar doesn’t pick up some pace the broader sideways patter the Euro is trading in might be difficult to break.
The Cable was the surprise of the day on Friday as after a number of days in the red the British currency pulled above the 1.4250 area. The Pound looked past the bearish Retail Sales report figures that printed even worse than expected and managed to end the day above the 1.4250 level that is now the short-term support. However the bias remains bearish and we’re not sure whether the Pound can sustain these gains.
Focus of the day
The economic calendar today is relatively empty and the focus will be mostly on the Euro, the release of the IFO Business Confidence report and ECB President Draghi’s speech are the only two important events of the day. The bias for both of them is bearish hence we should keep an eye on the Euro for more price action today, any excess bearishness from the ECB President and the Euro might threaten to break below its lows.
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