Huck’s Pre-Week Market Analysis for February 18 to 22, 2013

It’s a brand new week, which means that it’s time for me to put my thinking cap on and analyze the market. This week, I’m watching EUR/USD and GBP/USD.

Fundamental Picture

We saw a lot of action in the forex market last week. For the most part, we have the G20 meeting to thank for as the major economies of the world discussed the possibility of an all-out currency war. This resulted in a strong euro and a weak yen early in the week.

Economic data releases also contributed to market volatility. For instance, disappointing CPI figures from the U.K. caused the pound to tank, while negative GDP figures from the euro zone sparked rumors that the ECB could soon change its mind about keeping its hands off further stimulus.

Moving forward, I think upcoming tier-1 data like the German Zew, BOE MPC meeting minutes, and FOMC meeting minutes, will dictate the fate of most major currencies.

Potential Trades

EUR/USD: Bearish

EUR/USD 1-hour Chart

I think I made a good call on shorting EUR/USD last week. You’d think that I would’ve changed my mind by now, but I’m actually still bearish on the pair. In this silly, barista girl’s own opinion, concerns about growth will continue to weigh heavily on the euro this week.

I’m not going to sell right away though. I’m going to be patient and wait for a test of the trend line resistance somewhere between the 38.2%-61.8% Fibonacci retracement levels.

GBP/USD: Bearish

GBP/USD 1-hour Chart

My analysis on GBP/USD is similar to EUR/USD. I believe it has more room to fall since price is below both the 100 and 200 SMAs. Just like in EUR/USD, I’m going to wait for price to retrace before jumping in on a short trade.

Do you agree with my analysis? Let me know your thoughts on them, as well as any other trade setups you spot on the majors.

XOXO,

Huck

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