Trading plan for 14/02/2017:
There will be a few economic releases during the European and American trading session, so let's take a look at the major fundamental events today: Consumer Price Index data from UK, ZEW Economic Sentiment from Germany and speech of the Federal Reserve Chairperson Janet Yellen.
09:30 am GMT - Consumer Price Index from the UK
The Consumer Price Index data from the UK are scheduled for release at 09:30 am GMT today and they are the most important news release for European session. The market participants expecting the CPI to decrease significantly from 0.5% last month to -0.5% and on the yearly basis from 1.9% to 1.6%. It is worth to mention that the inflation expectations are rather high among the market analysts, so any decrease in the inflation is not welcomed by the Bank of England.
The possible scenario for the GBP/USD pair after the news release is rather simple. In case of better than expected numbers, the market will try to rally and break out above the technical resistance at the level of 1.2581. In case of worse than expected numbers, the golden trendline should be violated and the market should get back to the trading range between the levels of 1.2411 - 1.2581.
10:00 am GMT - ZEW Economic Sentiment from Germany
ZEW release, which tracks sentiment among financial analysts, offers an early estimate of economic conditions for February. They think the sentiment will be steady for the current and expected data. Moreover, after the gain that lifted the benchmark of ZEW Current Situation to a five-year high, the current readings should remain at elevated levels despite the political risk looming just around the corner.
Let's take a look at the EUR/USD technical picture at H1 time frame and figure out how the market can react after the news release. The golden trendline still acts as a dynamic resistance and only a sustained break out above this line will change the bias from bearish to bullish. The market conditions are not oversold anymore, so there is a chance for this pair to rally if the news will be better than expected. The target for the bulls should be set at the technical resistance at the level of 1.0658.
03:00 pm GMT - Federal Reserve Chairperson Janet Yellen Speaks
Any reiterations from the last FED meeting minutes regarding a possible (and planned) interests rate hike or any hawkish tone of the speech regarding the US economy (employment, wages, inflation, etc.) will be positive for the US Dollar.
So let's check the technical situation at the US Dollar Index on the 4H time frame. The bears have managed to test the technical resistance at the level of 101.03, but no follow through has occurred so far. This is why any hawkish tone of Yellen might spark another rally towards the next technical resistance at the level of 101.73.
