Chances For Breakouts Increase After Yesterday’s Consolidation
Not much has happened on Thursday apart from several false break-outs that have led to a poor performance. It seemed that the currency market took a breather before establishing new trends. Both major currency pairs traded sideways within narrow ranges and strained trader’s nerves. Only this morning we saw a slight upward trend, driving the euro toward 1.1070 and the cable above 1.40. Currently we are looking for break-outs above 1.1080 in the EUR/USD and above 1.4020 in the GBP/USD.
Nevertheless, euro traders should be cautious with bullish engagements below 1.11/1.1120 as the euro is likely to come under pressure ahead of the next European Central Bank meeting in March considering the ECB’s easing bias. Bullish momentum could thus be limited until 1.1150. Before heading towards the 1.11-level a small hurdle could be at 1.1092. On the bottom side the 1.10-level remains in focus.
The GBP/USD trades currently around the 1.40-level. If the pair is able to break above 1.4020/35 we may see a relief rally towards 1.4085 and 1.4120. A current support could be at 1.3920 and sterling bears should wait for a significant break below 1.39/1.3880 in order to sell GBP toward lower targets.
The performance of the U.S. dollar will mainly hinge on important economic data, such as GDP reports, scheduled for release at 13:30 GMT as well as spending figures and PCE indices, due at 15:00 GMT. In case of any surprises we could see strong fluctuations in the greenback.
Euro traders should keep an eye on German Consumer Prices scheduled for release at 13:00 GMT.
We wish you profitable trades and a beautiful weekend.
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