Alpesh Patel's NEWSLETTERPRO - Volatility in the majors to pick up today after a slow and quiet start of the week

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© Alpesh Patel

Reduced volatility across all major currency pairs yesterday as the beginning of the week had no new developments and the US markets were also closed for Presidents Day.

During the European hours, the Euro retained its earlier gains and continued to hover around the 1.3720 level forming a tight sideways pattern. The European currency will have the chance to exit this pattern today as we expect the release of the ZEW survey that discusses the current and future economic outlook for Germany and the Euro area.

On the other hand, as we discussed yesterday the Pound declined against the US Dollar as the British currency was largely overbought and a correction lower was necessary. Traders took some profits off the table as the Pound reached 1,6800 on Monday’s Asian session and that drove Cable down to 1.6700. We remain bullish against the Pound ahead of the release of the Bank of England’s minutes from their last meeting. More on that in our Analysis section below.

The FTSE 100 was back in positive ground and the UK index has cleared above the 6,700 points again and it looks as if it still has a long way to go especially if the BoE minutes reveal policymakers’ optimism over the UK economy. We remind you that in their last meeting they abandoned the unemployment rate threshold for raising interest rates and significantly upgraded their growth forecasts.

British inflation and the ZEW survey expected

The Economic Calendar for today holds a couple of important economic events and the day will begin with the release of UK’s Consumer Price Index. The index measures inflation levels and recently the UK has shown healthy levels of inflation which is positive for the Pound. Today’s release is expected to come in line with recent figures and if this happens then we could see the UK currency gaining back the ground it lost yesterday.

Also early this morning, the ZEW survey will be released. The report discusses the current and future economic outlook for Germany and the Euro-zone and expectations make word for a positive printing that could help the Euro clear the 1.3700 level. The US market hours only have to offer a second tier housing index that will do little to change the current state of things for the US currency.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

9.30

GBP

Consumer Price Index

High

2.0%

2.0%

10.00

EUR

German ZEW Survey

High

61.5

61.7

10.00

EUR

Euro-zone ZEW Survey

Medium

73.3

15.00

USD

NAHB Housing Market Index

Medium

56

56

 

 

TECHNICAL ANALYSIS & LEVELS

EUR/USD

GBP/USD

FTSE 100

Gold

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