Weekly Update, Nov 12 – 16: Top Forex Setups & Economic Events To Trade

Posted Sunday, November 11, 2018 by
Arslan Butt • 3 min read
  • Dollar rose against the Euro and Sterling as the US Federal Reserve kept interest rates steady, but reaffirmed tightening the monetary policy.
  • Inflation figures from the US and UK will be under the spotlight in the coming week.
  • Dollar Index, EUR/USD and GBP/USD have a pretty nice trade setup that might get us 100+ pips. Watch out below…

The week closed with a stronger dollar sentiment as the Greenback pared losses against a basket of currencies. Bulls entered the market after the US Federal Reserve kept interest rates on hold but reaffirmed its monetary tightening stance, setting the stage for a rate hike in December.

In foreign exchange markets, trader focus is now moving back to the deviation between the monetary policies of the United States and other major economies, such as Japan, where interest rates are seen lingering exceptionally low. The Yen, as a result, rests near a five-week low against the dollar.

Dollar Index – US Inflation Figures Up Next

On Wednesday, the Bureau of Labor Statistics will be releasing the CPI m/m at 13:30 (GMT), which is expected to grow at the rate of 0.3% vs. 0.1% beforehand. If this really happens, the FED is going to be more confident about December’s rate hike.

On the other hand, the Core Retail Sales will remain in focus on Thursday at 13:30 (GMT). Core retail sales are expected to jump from -0.1% to 0.5% and the retails sales are expected to be 0.6%.

Both of these events are supporting the additional rate hike in 2018. Besides, the investors will be trading the Dollar with the bullish sentiment in the coming week.

Weekly Technical Levels

Support Resistance
96.12 97.04
95.83 97.33
95.37 97.79
Key Trading Level: 96.58

  • Technically, the dollar index trades above 20 & 50 periods EMA which signifies a bullish sentiment of traders.
  • The recent weekly candle managed to close above of a weekly resistance zone of $96.35, fueling the odds of further buying in the coming week.
  • The RSI & Stochastics are crossing above 50, indicating a strong bullish momentum in the dollar.
  • The dollar index can target $97.75, while the support prevails at $96.30 and $95.15.

EUR/USD – Descending Triangle Pattern In Play

On the daily timeframe, the single currency Euro consolidates in a descending triangle against the dollar. The triangle pattern extends a strong support to the EUR/USD above $1.1335. While on the upper side, the resistance prevails at $1.1450. Today, the violation of $1.1450 can lead the EUR/USD towards $1.1600.

On the other hand, the pair may remain in selling below $1.1450 until $1.1350 and $1.1315.

German GDP: It’s due on Wednesday, at 7:00 (GMT). We have already seen that the Eurozone economy stalled in Q3: 0.2% according to the first release. However, the report did not cover Germany, the largest country. The German GDP grew by 0.5% in Q2 and a slowdown is likely in Q3 with a potential for an obvious decrease of 0.3%.

Weekly Technical Levels

Support Resistance
1.1268 1.1451
1.12 1.1568
1.1016 1.1752
Key Trading Level: 1.1384

EUR/USD – Trade Plan

The idea is to stay bearish below $1.1375 with a stop loss below $1.1725 and take profit at $1.1300 and $1.1250.

GBP/USD – Series of Fundamentals Lined Up

The British Pound jumped during the previous week on the expectation for a Brexit deal. But the dovish signals from the Bank of England kept it bearish. However, a smooth departure from the European Union could indicate more interest rate hikes could be on the way.

GBP/USD – Technical Outlook
On the weekly chart, the cable took a bearish turn to test the 20 periods EMA at $1.2975, but it failed to give us a bearish crossover. This signifies uncertainty regarding the bearish reversal in the pair. The GBP/USD pair may face an immediate resistance near $1.3035 and $1.3175 along with a support near $1.2800.

The bullish breakout of $1.3175 is likely to push the GBP/USD into a new trading zone, which may offer further buying opportunities until 1.3335.

Weekly Technical Levels

Support Resistance
1.2897 1.3114
1.2819 1.3253
1.2602 1.347
Key Trading Level: 1.3036

GBP/USD- Fundamental Outlook

1 – GBP – Average Earnings Index 3m/y
It’s a leading indicator of consumer inflation and shows a change in price for businesses and the government pay for labor, including bonuses. Simply put, when businesses pay more for labor, the higher costs are usually passed on to the consumer which leads to inflation.

The UK’s Office for National Statistics reported 2.7% average earnings in Sept, whereas, economists are expecting it to rise by 3% in this month.

2 – GBP – Unemployment Report
It’s one of the most eyed economic data as it shows a change in the number of people claiming unemployment-related benefits during the previous month. The recent jobs report is expected to be neutral. Jobless claims rose to 18.5k in Sept but economists are expecting a less number (4.3k) of claims in Oct. The smaller figure shows a growth in the labor market and it encourages the BOE (Bank of England) to keep the policy hawkish.

In addition to this, the unemployment rate is expected to remain unchanged at 4%.

3- GBP – CPI

On Wednesday at 9:30 (GMT), the Office for National Statistics is due to the inflation report. Earlier, their inflation has cooled down and decelerated in recent months. The Consumer Price Index rose at 2.4% in September and a slight rise is projected now: 2.5% y/y.

Fellas, the GBP/USD is likely to stay supported this week in the wake of positive forecasts.

Good luck and keep following FX Leaders for another profitable week.

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