FOREX NEWS: US DOLLAR BOUNCES AT SUPPORT, BEARISH PRESSURE STILL PRESENT
EUR/USD
Forex News: Both the U.S. CPI and Retail Sales posted a better than expected value and this strengthened the greenback yesterday, bringing the pair right into support. Fed Chair Yellen’s dovish testimony erased almost all the gains later in the day.
Technical Outlook
The support at 1.0525 rejected price higher as soon as it was touched and both the Relative Strength Index and Stochastic are very close to their oversold levels so we expect the pair to continue to climb, possibly into 1.0600 zone. If the pair drops below 1.0525, the next destination is 1.0460 but we don’t expect it to be reached before a stronger retracement to the upside is completed.
Fundamental Outlook
The day’s main events are release of the U.S. Building Permits and Philly Fed Manufacturing Index, both scheduled at 1:30 pm GMT. These are leading indicators of economic activity in the construction and manufacturing sectors respectively, and higher values usually strengthen the US Dollar but to a limited extent. The forecast for the Building Permits is 1.23M and for the Manufacturing Index is 18.5.
GBP/USD
Similar to the other pair, the Cable dropped when the U.S. data was released and then erased all losses during Janet Yellen’s testimony. Now the pair is trading above support but below the bullish trend line.
Technical Outlook
As long as the pair is trading below the 50 period Exponential Moving Average and below the recently broken uptrend line, our bias is bearish, anticipating a touch of 1.2350. However, it is important to note that yesterday the US Dollar took a hit during Yellen’s testimony speech and this makes the picture less clear so we cannot exclude a move above 1.2480 and above the 50 period EMA. If this is the case, the bulls will probably continue the momentum until 1.2550 is reached again.
Fundamental Outlook
The United Kingdom didn’t schedule major economic releases for today so the pair’s direction will be affected by the U.S. indicators and by the technical aspect.