Today is the most important day of the week for this market in terms of news background as traders expect ECB meeting. And, if there is no intrigue with the main decision as no rate-hike is expected, then Draghi’s comments are of great interest. First, ECB President statements regarding the state of the European economy, which has been showing signs of a slowdown since the beginning of summer, are of great interest as well. Yesterday's European PMI data turned out to be much weaker than expected. In the context of new economic data, ECB head outlook for tight monetary policy, which the ECB announced before the end of 2018, will be in traders focus.
The technical situation in this market has not changed much in Asian trading, the market is trading with lower activity from the American session on Thursday. The pair slowed down the downward movement around levels 1.1380, and moved to consolidation. The market is oversold somewhat, but further downward movement is quite likely, as well as recovery to the area of 1.1515, especially given USD dollar technical conditions which are favorable for the development of the second scenario - the dollar is overbought and located near yearly highs. This picture can trigger a turn into a correction before the end of the week.
Trading recommendations - out of market
The downward movement of British currency is gaining momentum. On Wednesday, GBP / USD brake another important support area, 1.2920 zone. Thus, GBP / USD entered the operational space and now the road to the 1.2780 zone is open. Let us see how events will develop in this market today, all the conditions have been created for the formation of a new downward impulse down to 1.2780-1.2660. But lets keep in mind that it is USD dollar who dominated this market and if USD correction develops further we will see GBP downside momentum speed up.
Trading recommendations - shorts when market pulls back to 1.2920
The market continues to trade within a narrow sideways range 0.7100-0.7040. On Thursday, the pair has shifted to its lower range, which means that the chances for lower breakout are higher. Fundamental and news background also supports this scenario. However, the level of 0.7040 is a local minimum of the entire current downward impulse, originating in the zone 0.8090 with 2018 start. Breaking through it can be a difficult task and before the market passes lower we can see several more upward pullbacks.
Trading recommendations - out of the market
Yesterday, gold locally adjusted to the area of $ 1,225, where, as expected, a large volume of buy orders entered the market. The market provided another opportunity to join the upward movement at good levels. Today in early Europe, the market again tested the highs around 1233 area, but profit taking rolled back the quotes below. US index futures are in the green today, but the US dollar is under light pressure. The conditions are kind equal. However, the trading plan remains the same – careful longs when market pulls back lower to $1229.
Trading recommendations - longs in the 1229 area