EUR/USD And GBP/USD: Correction Or Free-Fall?
MaiMarFX | Nov 30, 2015 05:35AM ET
This week will be one of the most important and decisive weeks for currency traders. Not only do we have the European Central Bank, which is forecast to boost stimulus, but also the U.S. Payrolls data could be a guide for the Federal Reserve's monetary policy decision at their Dec. 15-16 meeting. Moreover, Fed Chair Janet Yellen is scheduled to address the Economic Club of Washington on Wednesday and appear before a congressional committee on Thursday.
The ECB is widely expected to announce more easing on Thursday in order to increase the region's sluggish inflation. This expectation should keep the EUR/USD under pressure ahead of the ECB meeting. In addition, U.S. employment data is expected to continue to show that job growth is still expanding solidly, justifying a rate hike before year-end. All these are good reasons to continue dollar buying but there is no trend without a correction and given the high expectations of the ECB's and Fed's actions, traders should be prepared for sharp corrections in the dollar rally.
How low could euro and sterling go before a correction may occur?
EUR/USD
Key will be the ECB's monetary policy decision on Thursday and depending on how aggressive additional measures will be announced, the euro could experience further losses. In the short-term, a next bearish target could be at 1.0540 with an extension towards 1.0520. As long as the pair remains above 1.05, we could see relief rallies towards 1.0670, 1.0770 and 1.08. Going into the ECB meeting, the euro could test the March low at around 1.0470. Once the 1.0460-level will be breached, the euro could free-fall towards parity.
GBP/USD
Taking a look at the weekly chart, sterling is trading within a clear downward channel. The support line is currently at around the 1.4930-level, where we see a possible support for the currency pair. Before touching lower levels, the 1.50-mark is key. Remaining above 1.50, significant corrections are becoming more likely, driving GBP towards 1.5150 and 1.5240. We see a major resistance at 1.54. However, a break below 1.4930/00 should accelerate the bearish momentum.
Today we will watch German Consumer Prices, scheduled for release at 13:00 GMT, which could impact on the EUR/USD. Furthermore, U.S. Pending Home Sales are due for release at 15:00 GMT.
Get The News You Want
We look forward to a volatile and challenging week and wish every trader many profitable trades.
Here are our daily signal alerts:
EUR/USD
Long at 1.0620 SL 25 TP 20, 40
Short at 1.0565 SL 25 TP 20, 40
GBP/USD
Long at 1.5070 SL 25 TP 20, 40
Short at 1.5015 SL 25 TP 20, 50
We wish you good trades and many pips!
Any and all liability of the author is excluded.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.