Forex News: Political Tensions on the Rise. Irregular Price Action Expected
Forex News: The pair had a mixed trading session yesterday, fist descending below the 1.1700 mark and then climbing above the level. Political tensions between the United States and North Korea contributed to the choppy movement.
As long as the pair is trading below the 50 period Exponential Moving Average and below the resistance at 1.1775, our short-to-medium term bias is bearish, anticipating another move below 1.1713 – 1.1700. Over the last months the US Dollar lost the battle with the Euro, so it’s clear that underlying bullish pressure still exists and now the latest candles show rejection, thus increasing the chances of a move up. We recommend caution because the US Dollar may be affected by surprise comments coming from American and/or North Korean politicians.
At 12:30 pm GMT the United States Producer Price Index comes out, showing changes in the price that producers charge for their goods. It is considered a high-impact indicator, with inflationary implications because eventually a higher producer price translates into a higher consumer price. The expected change is 0.1% and usually a higher than anticipated value strengthens the greenback.
The US Dollar gave back some of the gains yesterday, mostly due to disappointing economic data, but the pair found resistance at 1.3000 and bounced lower later in the afternoon.
The oversold condition of the Relative Strength Index was an early warning that a retracement will follow and this happened yesterday. The move up found good resistance at 1.3000 where it bounced lower, so we can expect this level to play an important role for future price action. Today’s direction will be mostly decided by the fundamental side but our bias is bearish as long as price stays below 1.3000. Keep in mind that the US Dollar may be affected by the political environment and by tensions between the U.S. and North Korea.
The Pound had a slow economic week so far and we can say that today is the busiest day of the week, with the British Manufacturing Production released at 8:30 am GMT. The indicator measures the change in the total value of goods produced by the manufacturing sector and usually has a high impact on the currency, with better than expected numbers strengthening it. Today’s forecast is a change of 0.0%, while the previous was -0.2%.
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.