Forex traders will get a broad selection of PMI data across the Eurozone to start the first full trading week of 2020. Economists are looking for slight improvements in the services sector. German retail sales were released this morning and came in significantly better-than-expected, suggesting a strong holiday shopping season. The EURGBP failed to capitalize on the report and remained in a holding pattern inside of its horizontal resistance area. How will price action react to today’s PMI data? Today’s fundamental analysis will take a look at price action in both directions.
Brexit is on track to be completed on January 31st 2020, but the transition period will keep the UK aligned with EU rules and regulation until December 31st 2020. This allows both sides a limited time-frame to reach a deal. UK economic data ended in 2019 on a soft spot. Economists expected today’s final services PMI to be revised higher, but to remain below the 50.0 level. Will bears pressure for a breakdown after the release of PMI data, or can bulls push for a breakout? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for Euro trades:
- German Retail Sales: German Retail Sales for November increased by 2.1% monthly and by 2.8% annualized. Economists predicted an increase of 1.1% monthly and 0.9% annualized. Forex traders can compare this to German Retail Sales for October, which decreased by 1.3% monthly and which increased by 1.4% annualized.
- Spanish Services PMI: The Spanish Markit Services PMI for December is predicted at 53.9. Forex traders can compare this to the Spanish Markit Services PMI for November, which was reported at 53.2.
- Italian Services PMI and Composite PMI: The Italian Markit Services PMI for December is predicted at 50.9. Forex traders can compare this to the Italian Markit Services PMI for November, which was reported at 50.4. The Italian Markit Composite PMI for December is predicted at 49.7. Forex traders can compare this to the Italian Markit Composite PMI for November, which was reported at 49.6.
- French Services PMI and Composite PMI: The Final French Markit Services PMI for December is predicted at 52.4 Forex traders can compare this to the previous French Markit Services PMI for December, which was reported at 52.4. The Final French Markit Composite PMI for December is predicted at 52.0. Forex traders can compare this to the previous French Markit Composite PMI for December, which was reported at 52.0.
- German Services PMI and Composite PMI: The Final German Markit Services PMI for December is predicted at 52.0. Forex traders can compare this to the previous German Markit Services PMI for December, which was reported at 52.0. The Final German Markit/BME Composite PMI for December is predicted at 49.5. Forex traders can compare this to the previous German Markit/BME Composite PMI for December, which was reported at 49.4.
- Eurozone Services PMI and Composite PMI: The Final Eurozone Markit Services PMI for December is predicted at 52.4. Forex traders can compare this to the previous Eurozone Markit Services PMI for December, which was reported at 52.4. The Final Eurozone Markit Composite PMI for December is predicted at 50.6. Forex traders can compare this to the previous Eurozone Markit Composite PMI for December, which was reported at 50.6.
- Eurozone Sentix Investor Confidence: Eurozone Sentix Investor Confidence for January is predicted at 2.6. Forex traders can compare this to Eurozone Sentix Investor Confidence for December, which was reported at 0.7.
- Eurozone PPI: The Eurozone PPI for November is predicted to increase by 0.1% monthly and to decrease by 1.5% annualized. Forex traders can compare this to the Eurozone PPI for October, which increased by 0.1% monthly and which decreased by 1.9% annualized.
Here is the key factor to keep in mind today for British Pound trades:
- UK Markit/CIPS Services PMI and Markit/CIPS Composite PMI: The Final UK Markit/CIPS Services PMI for December is predicted at 49.1 and the Final UK Markit/CIPS Composite PMI is predicted at 48.5. Forex traders can compare this to the previous UK Markit/CIPS Services PMI for December, which was reported at 49.0 and to the previous UK Markit/CIPS Composite PMI, which was reported at 48.5.
Should price action for the EURGBP remain inside the or breakdown below the 0.8500 to 0.8560 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.8530
- Take Profit Zone: 0.8355 – 0.8275
- Stop Loss Level: 0.8590
Should price action for the EURGBP breakout above 0.8560 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.8590
- Take Profit Zone: 0.8750 – 0.8810
- Stop Loss Level: 0.8560
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