FOREX NEWS: VOLATILITY DIMS, PAIRS SHOW MIXED TRADING SIGNALS AHEAD OF U.S. PRODUCER PRICE DATA AND CONSUMER SENTIMENT SURVEY
Forex News: After bouncing perfectly at 1.0630 resistance, the pair remained in a relatively tight range and moved almost sideways for the remainder of yesterday’s trading session. The pair is still below the 50 EMA and the bias remains slightly bearish.
As long as the pair is trading below 1.0630 resistance and below the 50 period Exponential Moving Average, we anticipate a drop through 1.0570 support and an encounter with 1.0525. Once and if the two resistance elements are broken, we expect to see a move into 1.0680. However, it must be noted that at the moment control doesn’t clearly belong to either side and the pair seems to be drifting without a strong bias.
The US Dollar will be influenced today by two indicators with a potentially high impact: the Producer Price Index and the University of Michigan Consumer Sentiment. The first indicator shows changes in the price charged by producers for their goods and has inflationary implications because a higher producer price will eventually generate a higher consumer price. The release is scheduled at 12:30 pm GMT and the expected change is 0.0% (previous 0.3%).
The Consumer Sentiment survey comes out at 2:00 pm GMT and offers insights into the opinions of 500 consumers regarding current and future economic conditions. The expected value is 97.1 and numbers above it show optimism, usually creating USD strength.
The British Claimant Count released yesterday showed that a higher number of individuals asked for unemployment related benefits but another report released at the same time showed that average earnings have increased. This was perceived as bullish for the Pound and outweighed the unemployment data.
The pair broke 1.2480 and remained above it, so now we anticipate a move into 1.2550 in the near future. It is very possible to see a correction lower once the Relative Strength Index enters overbought territory, but this move will be probably rejected by 1.2480, which has already turned into support. If this support will be broken, we expect a move back to the recently broken trend line.
The United Kingdom didn’t schedule major economic releases for today, so the pair will be affected by the U.S. announcements and by the technical aspect.