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FOREX NEWS: EUROPEAN MANUFACTURING AND US HOUSE-MARKET DATA AHEAD

EUR/USD
Forex News: The main trend Friday was bearish, partially generated by a light overbought state of the market. There were no important economic releases and price action was relatively smooth.


Technical Outlook
Price failed to finish the trading day below 1.3585 and the bulls have been showing some pressure lately, stopping the bearish momentum at 1.3520. However, neither bulls nor bears are in clear control and today’s direction will be determined by price behavior around the current level of interest (1.3585). A bearish break will make 1.3520 the next target while a bounce higher will most likely take the pair back into 1.3640 resistance zone.

Fundamental Outlook
At 7:00 am GMT the French Manufacturing PMI is announced but no change is expected from the previous value of 49.6; half an hour later the German Manufacturing PMI is released and expected to change from 52.3 to 52.7. Both are leading indicators of economic health based on the opinions of purchasing managers from the Manufacturing sector and higher numbers are usually beneficial for the Euro.

The United States will release at 2:00 pm GMT the Existing Home Sales numbers which are expected to increase from 4.65M to 4.74M. The indicator has a slightly greater importance than the New Home Sales (will be released a day after) because existing homes represent the majority of total sales. Higher numbers usually strengthen the US Dollar.

GBP/USD
Friday the pair retraced lower, a normal behavior, considering the extended move upwards and the overbought condition signaled by the Relative Strength Index; however, the bears didn’t manage to break important levels.


Technical Outlook
The move south seen Friday is considered just a retracement, not a reversal; a good place for price to start moving upwards again is 1.6996 which was previous resistance and now may become support. A bearish break of the mentioned level would indicate that high prices become harder and harder for bulls to sustain and would weaken the current uptrend, making 1.6920 the next medium-term destination. Resistance now sits at 1.7063.

Fundamental Outlook
The United Kingdom doesn’t release any major economic indicators today and price action will be mostly influenced by the technical aspect and by the US data mentioned above.