For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
Trading plan for February 14
The day will be highlighted by the important releases for the United States. The level of retail sales core retail sales and PPI are expected to be published at 15:30 MT time. According to analysts, headline retail sales and PPI will advance by 0.1%. At the same time, the level of core retail sales will likely stay at the same level.
Don’t forget about the headlines. Today, Theresa May will be holding another round of Brexit votes in the Parliament. This meeting was claimed as a "Valentine's Day Massacre", where the members of the Parliament could make significant changes to the current Brexit deal in an attempt to take control of the process and force the government to rule out a no-deal scenario. If the government agrees with the parliament to make changes, the GBP will be supported.
Now let’s switch to the charts.
Yesterday the pair fell due to the strong USD. During the Asian session, the news on the possible extension of the US tariffs deadline on Chinese imports resulted in a risk-on sentiment in the market and pulled the USD down. As a result, EUR/USD rebounded. However, the trend for the pair remains bearish, according to parabolic SAR. Now let’s look at the H4 chart. We can see that the pair has crossed the pivot at 1.1273 and already tested the resistance at 1.1283. If today’s releases make the USD stronger, the pair will break the support at 1.1273 and fall to the support at 1.1258. Otherwise, if the American releases disappoint the market, bulls will manage to break the resistance at 1.1283 and push EUR/USD higher to the resistance at 1.1328. If we look at MACD, we see the bullish divergence. That means the pair is expected to reverse to the upside.
Now let’s look at GBP/USD. The pair also fell yesterday amid the strong USD and disappointing CPI release. Since the beginning of the day, the weakness of the USD pushed the cable higher to the 100-day MA. We also see the downtrend for the pair.
On the H4, the British pound has managed to rise to the 1.2870 level. However, we see that bulls are unable to hold this level for now. If the parliament does not suggest any solution to the Brexit problem and the USD strengthens, we will see a further slide towards the support at 1.2825. The next support is placed at 1.2778. If the news from the parliament contains positive notes today, GBP/USD will rise above the resistance at 1.2870. The next resistance for the pair is situated at 1.2915.
The higher prices seen today are generally related to the pandemic, that’s no doubt. US consumer prices jumped in October at the fastest pace in three decades putting the Biden administration on the defensive and increasing prospects that the Federal Reserve will raise interest rates next year. Jerome Powell says Fed will discuss speeding up bond-buying taper at the December meeting. What does it mean for markets?
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