[B]FOREX NEWS: US DOLLAR STILL FEEBLE, RESISTANCE EXPOSED[/B]
[B]EUR/USD[/B]
Forex News: The pair pushed into 1.0710 resistance but there, an expected retracement took place and now price is moving lower, below 1.0680. Mario Draghi’s speech didn’t have a strong impact and yesterday’s price direction was mostly driven by the technical aspect.
[B]Technical Outlook[/B]
As seen from the chart above, the Stochastic and Relative Strength Index reached overbought almost at the same time and this also coincided with the touch of 1.0710 resistance. These factors generated a bearish move, which is considered a retracement at the moment, not a reversal. We expect 1.0710 to be tested again today and if the bulls fail to take price above it, this will suggest that a reversal is in the making and 1.0630 will become the first target.
[B]Fundamental Outlook[/B]
The first important release of the day is the German ZEW Economic Sentiment, a survey of about 275 German investors and analysts that tries to gauge their opinions regarding a 6-month economic outlook. The survey acts as a leading indicator of optimism, with higher numbers strengthening the Euro. The time of the release is 10:00 am GMT and the expected number is 13.2.
The US Dollar will be affected by the release of the Producer Price Index, which tracks changes in the price charged by producers for their goods. It acts as a leading indicator of inflation because a higher producer price will eventually translate into a higher price paid by the consumer. The release is scheduled at 12:30 pm GMT and the forecast is a change of 0.1% (previous 0.6%).
[B]GBP/USD[/B]
The pair retraced higher, as it was signaled by the long distance traveled to the downside and by the bottoming pattern formed near 1.2125 support. Overall the bias remains bearish after the retracement becomes exhausted.
[B]Technical Outlook[/B]
Yesterday’s climb took the pair into the 50 period Exponential Moving Average and now the candles are showing long wicks, which is a sign of indecision; however, this could be just an accumulation for a push above the 50 EMA and above 1.2250 resistance. If this is the case and the two forms of resistance are broken, the pair is likely to climb back towards 1.2350 but this distance will not be traveled in one day unless surprising events take place.
[B]Fundamental Outlook[/B]
The United Kingdom didn’t schedule important economic releases, thus the deciding factors for direction will be the technical aspect and the U.S. Producer Price Index.