FX.co ★ Trading plan for 20/02/2017

Trading plan for 20/02/2017:

The US markets will be closed today due to the President's Day, let's take a look what are the most important macroeconomic events for the week of February 20-26 and how they might influence the major pairs.

The interplay of politics, economics and market trends will be a key focus for the market participants this week. Further President Trump's rhetoric regarding the tax plans and the developments surrounding the French Presidential election will also have a significant impact.

GBP/USD analysis for 20/02/2017:

The most important event for this pair will be UK House of Lords Article 50 debate on February 20th and 21st. The upper chamber of the British Parliament will debate the Bill over the two days before it passes into the committee stage. The debate might get even more important because the British PM Theresa May still wants to trigger Article 50 around the March 9-10 EU Summit.

The debate is likely to trigger choppy GBP/USD trading conditions during the week, so this pair should trade in the range of 1.2347 to 1.2581 until some important decisions are finally made. Sideways price action is expected here then.

EUR/USD analysis for 20/02/2017:

The most important events for the EUR/USD are Eurogroup meeting conclusions (scheduled to start on February 20th) and Eurozone PMI releases (scheduled for release on February 21st at 09:00 am GMT). During the Eurogroup meeting, the main focus will be centered on the discussion on Greece and efforts to finally conclude a review of bailout reforms which has stalled for months. The German and Dutch governments have stated that they will not continue with the bailout program unless the IMF decides to participate again. On the other hand, the PMI data release will be an important indicator of whether the stronger growth trend is likely to be sustained and whether underlying inflation pressures are increasing.

Both of the events might cause an increased volatility on the EUR/USD pair, so let's take a look at the EUR/USD technical picture at the H4 time frame. The market conditions look overbought after the bull camp has managed to break out above the golden trendline. The market can break out above the nearest technical resistance at the level of 1.0679 when PMI data will beat the expectations significantly (1-2 standard deviations) or when the Eurogroup meeting will decide to transfer another tranche of Euro to the Greece. Otherwise, the down trend will likely to continue.

US Dollar Index analysis for 20/02/2017:

The most important events for the US Dollar Index will be the release of the Federal Reserve Meeting Minutes on Wednesday 22nd at 07:00 pm GMT. The minutes will indicate that the FED is expecting to hike the interest rates further over the next few months and the global investors will be looking for a clue whether there is any clear indication of the anticipated rate hike in March 2017. This will be the most important signal from the minutes.

The US Dollar Index is currently trading in oversold trading conditions after the bulls have managed to break out above the golden trendline. The price had managed to retrace over 50% of the recent leg down and now it is trading around the moving averages levels. The key level to the upside is the technical resistance at the level of 101.77, so any hawkish remarks in the FED minutes will likely lead to a break out above this level with ease. On the other hand, a lack of these remarks will likely cause a choppy, sideway price action and a possible test of the technical support at the level of 99.21.