Major Currency Pairs Are in a Consolidation Phase (Weekly Review)

2020-08-18
After the spring turmoil amid the coronavirus pandemic, markets are relatively calm. A rather long period of the USD decline was replaced by a consolidation phase, which is not surprising, given its oversold and overbought conditions of a number of its competitors. In addition to technical factors, market participants are in no hurry to resume sales due to the uncertainty surrounding the US presidential election.

Also in the consolidation phase, the EUR/USD was traded last week within a range limited by the 1.1715 support and the 1.1860 resistance. The spread of the coronavirus in Europe poses serious risks of losing support and developing a larger downward correction, which can only be prevented by negative news from the United States.

A similar situation is observed in the GBP/USD. The British currency is also bogged down in the consolidation range, while the threat of chaotic Brexit or London's conclusion of an “unprofitable” trade deal with Brussels and weak macroeconomic indicators in the UK may become a reason for the pair to drop to 1.2800 at least, and only a positive outcome of trade negotiations with the EU can give the GBP forces to test and break through the current highs.

Schedule for this week:

Monday, August 17
12:30 GMT - USA. NY Empire State Manufacturing Index;
14:00 GMT - USA. NAHB Housing Market Index.

Tuesday, August 18
01:30 GMT - Australia. Reserve Bank of Australia (RBA) Meeting Minutes;
12:30 GMT - USA. Housing Starts;
12:30 GMT - USA. Building Permits.

Wednesday, August 19
23:50 GMT - Japan. Adjusted Trade Balance;
06:00 GMT - United Kingdom. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Core Consumer Price Index (CPI);
09:00 GMT - Eurozone. Consumer Price Index (CPI);
12:30 GMT - Canada. Consumer Price Index (CPI);
12:30 GMT - Canada. Core Consumer Price Index (CPI).

Thursday, August 20
06:00 GMT - Germany. Producer Price Index (PPI);
12:30 GMT - USA. Philadelphia Fed Manufacturing Index;
12:30 GMT - USA. Initial Jobless Claims.

Friday, August 21
23:30 GMT - Japan. National Consumer Price Index (CPI);
06:00 GMT - United Kingdom. Retail Sales;
07:30 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
07:30 GMT - Germany. Markit Composite Purchasing Managers Index (PMI);
08:00 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
08:30 GMT - United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI);
12:30 GMT - Canada. Retail Sales;
13:45 GMT - USA. Markit Manufacturing Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst

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