How long will it take for the ECB to roll out more stimulus and what form will it take during the next round of quantitative easing? The Eurozone economy continues to struggle, led by its export engine Germany, and the ECB has noted that governments need to step in and help the central bank stimulate the economy. Germany has so far refused to change its constitution in order to allow more spending and claims there is no economic crisis which warrants this. Who will cave in first? The EURGBP has started to descend as Brexit is approaching and the woes of the Eurozone trump those of the potential of a no-deal Brexit. Should forex traders seek to add to short-positions in this currency pair? Today’s fundamental analysis will take a look at price action and explore its downside potential and weigh its upside risk.
While forex traders will get a triple dose of Eurozone confidence data this morning, British Pound traders will digest the a contraction in the BRC Shop Price Index for August and expect a small rise in nationwide house prices after mortgage approvals beat expectations yesterday. Opposition parties in Parliament try to form a strong enough opposition to force a delay of Brexit as Nigel Farage pledges his support to PM Johnson if he pushes through a no-deal Brexit. How will this impact the British Pound moving forward, can the sell-off in the EURGBP extend further to the downside? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this currency pair!
Here are the key factors to keep in mind today for Euro trades:
- German Import Price Index: The German Import Price Index for July is predicted to decrease by 0.1% monthly and by 2.0% annualized. Forex traders can compare this to the German Import Price Index for June which decreased by 1.4% monthly and by 2.0% annualized.
- German GfK Consumer Confidence Survey: The German GfK Consumer Confidence Survey for September is predicted at 9.6. Forex traders can compare this to the German GfK Consumer Confidence Survey for August which was reported at 9.7.
- Italian Confidence Data: Italian Business Confidence for August is predicted at 99.8 and Italian Consumer Confidence is predicted at 109.6. Forex traders can compare this to Italian Business Confidence for July which was reported at 100.1 and to Italian Consumer Confidence which was reported at 113.4.
- Eurozone Money Supply M3 and Private Sector Loans: Eurozone Money Supply M3 for July is predicted to increase by 4.7% annualized and Private Sector Loans are predicted to increase by 3.5% annualized. Forex traders can compare this to Eurozone Money Supply M3 for June which increased by 4.5% annualized and to Private Sector Loans which increased by 3.3% annualized.
Here are the key factors to keep in mind today for British Pound trades:
- UK BRC Shop Price Index: The UK BRC Shop Price Index for August decreased by 0.4% annualized. Forex traders can compare this to the UK BRC Shop Price Index for July which decreased by 0.1% annualized.
- UK Nationwide House Prices: UK Nationwide House Prices for August are predicted to increased by 0.1% monthly. Forex traders can compare this to UK Nationwide House Prices for July which increased by 0.3% monthly.
Should price action for the EURGBP remain inside the or breakdown below the 0.8985 to 0.9085 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.9025
- Take Profit Zone: 0.8615– 0.8720
- Stop Loss Level: 0.9100
Should price action for the EURGBP breakout above 0.9085 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.9115
- Take Profit Zone: 0.9230– 0.9285
- Stop Loss Level: 0.9085
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