FOREX NEWS: CHOPPINESS CONTINUES, BREAKOUTS ON THE HORIZON
Forex News: U.S. Gross Domestic Product showed a change of 1.9%, below analysts’ expectation of 2.1% and this contributed to bullish price action for the pair yesterday. Despite a better than expected U.S. Consumer Confidence survey released later in the day, the US Dollar couldn’t drive the pair lower.
Price has moved above the resistance at 1.0610 for the second time in a short while and it seems like the bulls are taking control of price action, although volatility remains relatively low. Price is trading above the 50 period Exponential Moving Average and above resistance, with the Relative Strength Index showing some upside momentum so we expect to see a climb into 1.0650 but once the RSI becomes overbought, the pair is likely to reverse, especially if this happens near resistance and volatility remains low.
Early today, at 2:00 am GMT, U.S. President Trump will speak before the Congress about healthcare and other topics. The impact of this speech is not known but caution is recommended. Later in the day, at 1:00 pm GMT the German Preliminary Consumer Price index comes out, showing changes in the price paid by consumers for the goods and services they purchase. This is the main gauge of German inflation and plays an important role for overall European inflation, with higher values than the expected 0.6% strengthening the Euro.
The last important release of the day is the U.S. Manufacturing PMI, scheduled at 3:00 pm GMT and expected to post a figure of 56.2. The survey acts as a leading indicator of economic health, derived from the opinions of purchasing managers and usually a higher value strengthens the US Dollar but the impact is often limited if the actual number matches expectations.
The pair completed another lacklustre day yesterday, without any major developments on the fundamental scene and with choppy price action, which lacked clear direction.
Resistance was touched and price moved lower but failed to break support and now appears to be headed higher; this behaviour is a clear indication that neither bulls nor bears are in control and the pair lacks direction. As long as price remains between 1.2420 and 1.2480 and the 50 Exponential Moving Average is flat, we consider it in a range and our bias is neutral, expecting a strong breakout.
Today at 9:30 am GMT the Pound will be affected by the release of the British Manufacturing PMI, a survey of purchasing managers from the manufacturing sector. The indicator usually brings Pound strength if it posts a higher reading than today’s forecast of 55.7 but the impact is often mild.