FOREX NEWS: EUROPE CELEBRATES LABOR DAY. CHOPPY PRICE ACTION EXPECTED
EUR/USD
Forex News: Price showed mixed movement Friday, first climbing to touch resistance and then bouncing lower, erasing most of the gains. For now the pair remains in a range, without clear direction.
Technical Outlook
Friday’s bounce lower after touching 1.0950 resistance showed that the bulls are lacking the strength to take the pair higher and this makes us anticipate a move lower, into the 50 period Exponential Moving Average. From a longer term perspective the pair is in an uptrend so we don’t exclude a break of 1.0950, but as long as price remains below this level, our bias is bearish.
Fundamental Outlook
Today banks across Europe will be closed, celebrating Labor Day and no major indicators will be released. Volatility and price action will also be affected, so we recommend caution throughout the day.
At 2:00 pm GMT the U.S. Manufacturing PMI comes out, showing the opinions of purchasing managers from the manufacturing sector about the economic health of this sector. The forecast is 56.6 and usually, higher numbers strengthen the currency.
GBP/USD
The British Gross Domestic Product disappointed Friday but the same was true for the U.S. GDP and the pair wasn’t much affected by the releases. Price continued higher, following the break of 1.2905.
Technical Outlook
The bias remains bullish, anticipating a move into 1.3000 psychological resistance. The level at 1.2905 can be considered support because price returned to re-test it from above after the bullish break and then bounced higher; this means that a break of the level would show bearish pressure and might trigger a move lower, possibly towards the 50 period EMA. Also, the Relative Strength Index is overbought and this is an early signal that price may reverse or at least retrace lower.
Fundamental Outlook
British banks will be closed today in observance of May Day and no important economic indicators will be released. This will most likely affect volatility and price behaviour.