President Trump fired secretary of state Rex Tillerson, yesterday, sparking new uncertainty in the global political scene. According to media, CIA director Mike Pompeo is to succeed Tillerson. Overall, political analysts consider Pompeo more as a hawk, while Tillerson was considered more of a deal maker. Should that be the case we could see a more aggressive US stance in regards to international matters like North Korea and Iran. In such a scenario, the possibility of such issues being resolved could be moving further away and uncertainty could be on the rise. Further internal and global uncertainty, as well as possible negative headlines, could weaken the US Dollar. EUR/USD rose yesterday upon the release of the US inflation data and broke the 1.2355 (S1) resistance line (now turned to support). We see the case for the pair to stabilise somewhat as the dust slowly settles down and continue to trade in a sideways manner in the next couple of days with some bearish mood. The release of today’s financial data especially the US retail sales and tomorrows US industrial production growth rate could favour the USD strengthening the argument for the above. Should the bears take the driver’s seat we could see the pair driving south, breaking the 1.2355 (S1) support line and aim for the 1.2230 (S2) support level. On the other hand, should the bulls have the upper hand we could see the pair breaking the 1.2495 (R1) resistance level.
- Support: 1.2355(S1), 1.2230(S2), 1.2100(S3)
- Resistance: 1.2495(R1), 1.2680(R2), 1.2885(R3)
EU warns of Brexit consequences
EU’s chief negotiator Barnier increased the pressure on UK PM May yesterday as he ruled out a number of UK demands. The statements more or less ruled out a “cherry-picking” strategy and were indicative of the gap between the UK and the EU positions. Analysts point out that the statements come as a response to Theresa May’s Brexit speech earlier this month and their timing could be crucial as the EU summit is drawing nearer. On other news EU Commission, President Juncker asked for more clarity from May about the future relationship of EU and the UK. Any further negative headlines about Brexit could weaken the sterling. GBP/USD jumped yesterday, breaking the 1.3915 (S1) resistance line (now turned to support). We see the case for the pair to stabilise and continue to trade in a sideways manner with some bearish tones for the next couple of days as the financial data due to come out may favor the USD side. Should the pair come under selling interest we could see it breaking the 1.3915 (S1) support line and aim for the 1.3775 (S2) support barrier. Should it find fresh buying orders, we could see it breaking the 1.4040 (R1) resistance line and aim for the 1.4168 (R2) resistance hurdle.
- Support: 1.3915(S1), 1.3775(S2), 1.3620(S3)
- Resistance: 1.4040(R1), 1.4168(R2), 1.4345(R3)
As for today’s other economic highlights:
In the European session, from Germany, we get the final HICP rate for February and from the Eurozone, we get the Industrial Production for January. In the North American session, we get the US PPI and retail sales for February as well as the Crude Oil Inventories figure. Last but not least, we get New Zealand’s GDP growth rate for quarter 4 of 2017. As for speakers ECB’s President Draghi, executive member Coeure, chief strategist Praet and Vice President Constâncio speak. Also, OPEC’s monthly report is expected to be released today.
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