Weekly Update, Mar 18-22: Top Forex Setups & Economic Events to Trade

Posted Sunday, March 17, 2019 by
Arslan Butt • 3 min read
  • The US dollar slipped against its peers on Friday and posted a weekly loss after weaker than expected data, adding to concerns of an economic slowdown.
  • The Brexit drama reached new highs as British MPs voted to delay Brexit.
  • Investor focus shifts to all-important macroeconomic events like monetary policy decisions from Federal Reserve and Bank of England.
  • Fundamentals & technical outlook for Dollar & EUR/USD. Here are the highlights for the next week.

Dollar Index – What’s Next This Week?

The US dollar declined against its peers on Friday and posted a weekly loss after weaker than expected data, adding to concerns of an economic slowdown.

The Empire State manufacturing index fell 5.1 points in March to a reading of 3.7, the New York Federal Reserve announced Friday. Fellas, it’s the third consecutive monthly reading below 10 and the lowest level since May 2017.

Moreover, industrial production – a figure that gauges the level of output at factories, mines, and utilities – moderated to 0.1% in February from the prior month. This was below the 0.4% rise forecast by economists.

Federal Reserve – Monetary Policy Meeting

Most of the movement in the US dollar depends on the monetary policy decision from the Federal Reserve. The event is due on Wednesday, March 20.

Previously, the US Federal Reserve made a significant dovish move in January, indicating patience in boosting interest rates. The Federal Reserve is expected to leave rates steady now and continue promising patience. Nevertheless, the thing we don’t know is if they are still considering a hike later this year.

Weekly Support & Resistance Levels
Support Resistance
96.524 97.602
96.192 97.934
95.653 98.473
Key Trading Level: 97.063

Key Technical Points

  • On the daily timeframe, the dollar index is testing 100 periods moving average which signifies a neutral bias. The 100 MA is supporting the dollar index above 96.45.
  • The dollar is showing a strong sell over fundamentals. But here’s the thing – the bullish trendline is likely to support it near $96.40.
  • The RSI & Stochastics are crossing below 50, indicating a strong bearish momentum in the dollar. But let’s see if the index manages to hold above bullish trendline support of $96.40.
  • The bearish breakout can extend a sell-off until $95.85 and $95.20.

EUR/USD – Strong Euro Faces Resistance

The single currency Euro has started getting stronger upon the weaker dollar. The side effects of the trade war discussions are overshadowing Italy’s debt crisis.

Potential Economic Events to Impact

On Friday, the European economy is due to release a series of economic events which include:

  • French Flash Manufacturing PMI – The figure is due at 08:15 (GMT) with a forecast of 50.6 vs. 50.2 during the previous month.
  • French Flash Services PMI – Beside the French Manufacturing PMI, the services PMI will be observed. It’s expected to drop slightly to 51.4 vs. 51.5.
  • German Flash Manufacturing PMI – The data will be released right after 15 mins of French services and manufacturing PMI at 08:30 (GMT). It’s forecast to rise from 48 to 47.6.
  • German Flash Services PMI – It’s scheduled with a forecast of 54.8, slightly below the previous month’s figure of 55.3

Technically, EUR/USD traded bullish at $1.1345 picking up from previous weeks low of $1.1185. The pair is below a strong resistance area of $1.1345 and has formed a tweezers top pattern which signals a reversal.

However, the RSI is still leading towards a bullish trend. That being said, we can expect EUR/USD to continue trading higher until $1.1404, while the support remains at $1.1174

Weekly Technical Levels
Support Resistance
1.125 1.1373
1.1174 1.142
1.1051 1.1543
Key Trading Level: 1.1297

EUR/USD – Market Sentiment

Weekly – Strong Sell
Daily – Neutral
Hourly – Strong Buy

EUR/USD – Trade Plan
The idea is to stay bullish above $1.1300 with a stop loss below $1.1260 and take profit at $1.1460 and $1.1535. While selling is preferred below $1.1290.

Good luck and have a profitable week!

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