Forex News: US Dollar Recovers then Dips Again. Inflation Data and Retail Sales in the Limelight
Forex News: The ECB revealed yesterday that some changes to the interest rate or QE program might be coming in early 2018 and this was the reason for the strong climb, which was further fuelled by a disappointing U.S. Producer Price Index.
The pair rallied after a dip into 1.1945 support and the strong move seen during yesterday’s trading session broke the resistance at 1.2000 with authority. This move will probably extend into the key resistance at 1.2092 (last year’s high) and the probability of another drop below 1.2000 is slim, at least for the moment. The US data released today will surely have a strong impact on the US Dollar and thus on the pair’s direction.
The US Consumer Price Index will be released today at 1:30 pm GMT, showing changes in the price that consumers pay for their purchases. It acts as a main gauge of inflation and usually has a positive effect on the greenback if it posts numbers above forecast, which for today is 0.1%.
At the same time the US Dollar will be affected by the US Retail Sales release, which shows changes in the total value of sales made through retail outlets. It is an important gauge of consumer spending and higher numbers than the expected 0.5% usually strengthens the greenback.
The US Dollar gave back all of the previous gains yesterday on the back of a disappointing PPI reading and the pair posted a bullish day, breaking above the 50 period EMA.
The latest momentum is clearly bullish based on the US Dollar weakness seen yesterday but the pair is facing a pretty strong resistance at 1.3550. If this barrier will be broken, we expect to see a push into the next key level at 1.3600. Possible moves lower should find good support at the 50 period Exponential Moving Average but as long as price remains above it, our bias is bullish, although a clear trend is not yet established.
The Pound has another slow fundamental day ahead but the pair will be fuelled by the U.S. events mentioned earlier and by the technical side.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.