Alpesh Patel's NewsletterPro - Majors consolidated ahead of important events, is a breakout imminent?

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© Alpesh Patel

Any noteworthy volatility was absent during the first trading day of the week and the major currency pairs we discuss every day consolidated around the same levels they closed last week. With only Euro-related releases yesterday and with figures coming in as expected there was little to change the current outlook.

The Euro remained well bid above 1.3700 as the IFO confidence survey was released in line with expectations and the inflation data printed as expected. Inflation in the Euro area remains low and in our view this should trouble investors, however it seems that they are more concerned with the discouraging signs of weakness coming from the US. As long as the Euro holds above the 1.3700 mark there’s increased potential for the currency to take a shot at 1.3800 and a lower US Consumer Confidence release today might do the trick.

The Pound arrested its recent downtrend yesterday and traded higher versus the US Dollar. There were no currency related news for the British coin and nothing new from the US to lift the Pound yesterday, however an equities-related development is offering significant support to the currency pair. The telecommunications giant Vodafone sold a major holding stake in the US-based Verizon Wireless company last Friday and the flows of Pounds coming into the domestic economy is helping the pair remain well above the 1.6600 barrier.

The US Dollar remained largely unchanged across the other currency pairs and with no significant releases yesterday the Greenback traded sideways. However, the US currency will come under risk further down this week as a number of releases are scheduled and the effect of the brutal weather conditions is expected to put pressure to the Consumer Confidence report today and the Q4 GDP release on Friday.

The FTSE 100 scored a new yearly high yesterday reaching as high as 6,880 points, however we could see a potential retracement from these levels as the momentum of the rise is gradually fading away.

German GDP and US Consumer Confidence numbers expected

The Economic Calendar today only holds a couple of economic releases and no surprises are expected. Early in the morning the German Gross Domestic Product is scheduled for release and numbers are anticipated to show that Germany continues to grow at a steady pace, being the steam engine of the Euro area.

Later in the day, the US House Price Index will be released but our attention will mostly be focused on the Consumer Confidence report right after it. It is important to see how the severe weather conditions have affected the consumer index as another disappointing printing will take its toll on the weakened US Dollar.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

7.00

EUR

German GDP

Medium

1.4%

1.4%

14.00

USD

House Price Index

Medium

0.3%

0.1%

15.00

USD

Consumer Confidence

High

80

80.7

 

 

TECHNICAL ANALYSIS & LEVELS

EUR/USD

GBP/USD

FTSE 100

Gold

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