#EURUSD & #GBPUSD: 29th January - 4th February 2023

EUR/USD:

The EUR/USD continues to display bullish characteristics, but after reaching a high the past week not seen since April of 2022, the currency pair reversed lower.

The EUR/USD went into the weekend near the 1.08655 ratios. On the surface, this is a pretty good result for speculators who have maintained a bullish perspective of the currency pair. Unfortunately for day traders the EUR/USD has also delivered a strong amount of volatility while attaining it’s upwards trajectory and this was a full-on display last week. The EUR/USD climbed to a high of nearly 1.093000 on Thursday, but the currency pair stumbled lower on Friday.

The incremental climb upwards in the EUR/USD has sustained bullish signals, but pursuing the Forex pair is not particularly easy if a trader is over-leveraged and downward reversals knock them out of their positions too quickly. The coming week promises to also produce fast results which may be dynamic again. The U.S. Federal Reserve will release its Monetary Policy Statement on Wednesday, along with an anticipated rate hike of 0.25%. To top off this coming week’s trading action the U.S jobs numbers will be released on Friday. It should also be mentioned the Bank of England will announce its interest rate policy this Thursday.

The EUR/USD 1.09000 Ratio was Targeted and Hit by Speculators but not Sustained

Having finished the week of trading near the 1.08655 ratios may seem like a defeat for some bullish traders, but perspective is important. The highs reached on Thursday had not been seen since April of 2022, and the ability of the EUR/USD to flirt with values above the 1.09000 level has not gone unnoticed. The climb higher in the currency pair will never be a one-way direction and it would be foolish to pursue buying positions blindly. Traders need to remain realistic.

Technically the EUR/USD remains within sight of the 1.09000 juncture and traders wagering on this target likely remain abundant. U.S. fundamental economic data last week did show that growth is slowing in the States, and on Friday consumer spending also displayed signs of restraint.

U.S Federal Reserve will be a Focal Point on Wednesday of this Week

• The U.S. central bank is expected to raise interest rates by 0.25% on Wednesday, but many financial houses expect the Federal Reserve to also sound a less aggressive interest rate stance.
• If the U.S. Fed begins to show signs that it accepts the U.S. economy is slowing and states that a more dovish interest rate policy will develop over the mid-term the EUR/USD could get stronger.

EUR/USD Weekly Outlook:

The speculative price range for EUR/USD is 1.07800 to 1.09810

Support levels within the EUR/USD have demonstrated an ability to incrementally rise. The 1.08100 ratio now looks to be a bottom tier for the currency pair regarding any strong movements lower. Certainly, the EUR/USD could penetrate this level and traverse lower, but from a speculative point of view, the incremental increase of the Forex pair’s value is attractive. However, traders need to anticipate a large amount of volatility this coming Wednesday and for the range of the EUR/USD to broadly widen leading up to the U.S. Fed’s pronouncement before and after. If the Fed disappoints financial houses, the EUR/USD could find itself challenging support levels rapidly.

Traders however are likely anticipating the U.S. Fed to say they are going to remain vigilant regarding the U.S. economy and will consider only raising interest rates by small measures of 0.25%, and that the U.S. central bank will actually consider halting rate hikes in the mid-term. If the U.S. Fed signals they understand the U.S. economy is showing signs of slowing down, the EUR/USD would likely move above the 1.09000 level and potentially sustain value above this mark. The first couple of days of trading this coming week will likely see speculative positions placed and traders need to be braced for swift price action. If the 1.08700 mark exhibits a solid base and the 1.08900 juncture flirts consistently, a penetration of the 1.09000 mark could spark more bullish momentum and see last week’s highs brushed aside promptly.

GBP/USD

Speculators endured volatility last week in the GBP/USD, and this may have been only a hint of the fast price action that is certain to be demonstrated in the coming days.

The GBP/USD went into the weekend near the 1.23880 prices after demonstrating a rather dynamic week of trading. The GBP/USD started last Monday with a rapid rise above the 1.24000 level and reached its high for the week near 1.24475 early that day, but the currency pair then turned lower. On Tuesday afternoon the GBP/USD touched a depth of around 1.22630. And then the rest of the week provided fireworks as well with a high near the 1.24300 ratios on Thursday.

Last week may prove to have been a good learning ground for speculators who survived the tumult of the GBP/USD because, in the coming days, greater volatility will be produced. A huge week of powerful market forces waits for speculators in the GBP/USD. Traders who like to monitor the opening of the GBP/USD coming out of the weekend before dipping their toes in the water may want to be extra conservative.

Federal Reserve, Bank of England and U.S Jobs Data are all in the Pipeline

The GBP/USD has seen a rather solid bullish trend develop and it has been able to maintain its higher values when a one-month chart is examined. However, last week also clearly proved dangerous as the range of the GBP/USD delivered a rather volatile amount of price velocity. The GBP/USD has found it difficult to sustain prices above the 1.24000 level but has challenged higher values, while the 1.23000 mark looks to be a psychological barrier below but has also seen lower depths displayed.

The U.S. Federal Reserve will announce its interest rate policy this coming Wednesday, the Bank of England will follow with its decision on Thursday, and then U.S. job numbers will be released on Friday. Any one of these three events would typically cause chaotic short-term trading for the GBP/USD. These three important risk events combined will certainly make for a proactive and reactionary week of GBP/USD price action.

• The U.S. Fed is expected to raise its interest rate by 0.25% again on Wednesday. However, it is the policy outlook of the U.S. central bank everyone wants to know.
• Will the U.S. Federal Reserve begin to admit the U.S. economy is slowing and that its interest rate hikes will be paused in the coming months?
• The Bank of England is expected to increase its borrowing rate by 0.50% on Thursday.

Data from the U.S Suggests the Economy is Slowing Down

Inflation and growth data from the U.S. last week showed decreases. U.S. companies and their global counterparts are talking openly about less consumer demand. The U.S. and U.K. central banks have a responsibility to make clear decisions. Financial houses will react to the announcements and the GBP/USD will become choppy. Financial houses have been anticipating less aggressive policy and the GBP/USD will become dangerous as financial houses react to the pronouncements of the Federal Reserve and Bank of England. If the U.S. Fed shows it will consider stopping its interest rate hikes in the mid-term the GBP/USD could become stronger.

GBP/USD Weekly Outlook:

The speculative price range for GBP/USD is 1.22510 to 1.25290

Technical traders should be very careful this week. Certainly, important psychological ratios such as the 1.23000 and 1.24000 marks will be very important, but the behavioral sentiment will be affected in the coming days and if there is a shift of outlook by financial houses and large speculative forces, then the GBP/USD could become very volatile. The 1.227000 looks like it should hold as a strong line of support if the currency pair becomes bearish. Imagining a lower value that is sustained near 1.22600 seems farfetched, and this likely would only occur if the U.S. Federal Reserve signals a surprising amount of aggressiveness.

Bullish behavior continues to show signs of life in the GBP/USD, but traders may need to remain cautious regarding their upwards targets. The 1.24000 level needs to be sustained and prove that it can generate additional force that carries the GBP/USD above the 1.24400 ratios and still continue to rise. While the 1.25000 may feel attainable to some speculators and they may be proven right, timing the exact moment this goal will be hit is hard.

For more forex gold Indices analysis, Signals, and Account management services text me on my telegram: Claramellor

Best Forex Signal telegram

Forex Account Management Services

#Singapore #Dubai #Brasil  #UAE #USA #Amsterdam #Brussels #Dublin #Lisbon #London #Paris #fx #fxinvestment #fxanalysis #fxtrader #scalping #xauusdgold #xauusdsignal