Forex News: Euro Posts Fresh Highs, Pound Still in a Choppy Range Ahead of British Retail Sales
Forex News: U.S. data released yesterday was mixed, with the CPI matching expectations and Retail Sales coming above forecast but the US Dollar was mostly unfazed initially and the pair continued its ascension, reaching a high at 1.1860.
The bias is bullish but the pair is facing a strong resistance zone between 1.1860 – 1.1875 and the Relative Strength Index is deep in overbought territory. This makes us anticipate a move down, which will probably last until the RSI will exit overbought territory. The first potential support (1.1735) is far away from current price, so we don’t expect it to be reached today. To the upside, a break of 1.1875 resistance will show that the long term uptrend is about to resume.
AT 10:00 am GMT the Eurozone Final Consumer Price Index will be released, showing changes in the price that consumers pay for goods and services. The CPI is the main gauge of inflation but the Final version is the least important so the impact will be limited; however, higher numbers than the forecast 1.4% usually strengthen the single currency.
On the US Dollar side we have the Philly Fed Manufacturing Index, released at 1:30 pm GMT and expected to show a reading of 24.5. The index shows the opinions of manufacturers about business conditions in the Philadelphia district and has a medium impact on the currency, with higher numbers strengthening it.
British employment data came above expectations yesterday and this initially took the Pound higher but the strength was negated later by the U.S. data and the pair continued to show choppy movement.
After an early climb above 1.3175, the pair retraced below the level, creating a long-legged candle. This behaviour shows that price is still in a range, without clear direction, so we recommend caution until the balance tilts clearly to one side or the other. The levels to watch are 1.3225 as resistance and the 50 period EMA as support, followed by 1.3100.
The British Retail Sales will be released today at 9:30 am GMT, showing changes in the total value of sales made through retail stores. The indicator has a high impact on the Pound because retail sales represent the main part of consumer spending; the expected change is 0.1% (previous -0.8%) and higher values are beneficial to the Pound.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.