Forex News: US Dollar Takes Another Beating. Higher Prices to Follow?
Forex News: The pair remained in a tight range for most of yesterday’s trading session but later in the afternoon bullish pressure increased and we saw a break of the horizontal channel. However, it remains to be seen whether this break is true or not.
The move outside the horizontal channel created by 1.2195 support and 1.2280 resistance cannot be considered a true break at least at the time of writing. If it will turn out to be a clear break, then 1.2280 will become support and the next target will become 1.2350 followed by 1.2400. A more important resistance is located at 1.2570 but that’s a distance too big to be travelled over the course of one day.
We have a slow day ahead, with some Eurozone data making the headlines: at 9:00 am GMT the European Manufacturing and Services PMIs will be released, showing the opinions of purchasing managers about business conditions in the respective sector. The surveys act as leading indicators of optimism and economic health but the impact is often overlooked by market participants if the actual reading doesn’t differ a lot from expectations. The forecast for the Manufacturing PMI is 60.4 and for the Services PMI is 56.5.
The US Dollar remained under pressure yesterday and allowed the Pound to take the pair into 1.4000 territory. The move was mostly technical but the USD weakness played an important role.
At the time of writing the pair is hovering near 1.4000, which is a major psychological level that may trigger a bounce lower. The overall bias is clearly bullish and the pair is in an uptrend so all moves south should be treated as retracements as long as price remains above the 50 EMA. The first target for the day is 1.4050 if 1.4000 turns into support.
Today’s highlight for the Pound will be the Average Earnings Index, scheduled for release at 9:30 am GMT. The index shows changes in the wages paid by employers for labor and acts as a leading indicator of inflation because when businesses increase the price they pay for work, they usually increase the price of their products. The expected change is 2.5%, same as previous and higher numbers usually strengthen the Pound.
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.