Euro & Pound: Are We Finally Seeing The Long Overdue Correction?
Trading has been quiet with the dollar-trade losing its attraction. Fed Chair Janet Yellen did not comment on monetary policy when she spoke at a conference in Washington yesterday and market participants are skeptical about whether President Trump’s pro-growth policies will pass through Congress when Republicans did not even agree on a health-care bill.
U.S. Durable Goods Orders are scheduled for release today at 12:30 UTC but given the uncertain situation in the greenback, we doubt that we will see larger market movements today.
Gains in the EUR/USD were capped at 1.08 and given the fact that the euro was unable to overcome the 1.0820-boundary significantly, we expect further losses towards 1.0730/10. Euro bears should however wait for a renewed break below 1.07, which could send the currency pair tumbling towards 1.0620. On the upside we will focus on a break above 1.0805 which could lead to a subsequent test of the euro’s resistance level at 1.0850.
From the Eurozone we have the Manufacturing PMI reports scheduled for release at 8:30 and 9:00 UTC, but these reports could be of minor importance.
The pound sterling was on a roller-coaster ride after U.K. economic data came in better than expected. The GBP/USD surged from a low at 1.2463 to a high of 1.2531 but sterling bulls were unable to hold onto that high level. A correction was in any case long overdue and so we saw the pound falling back below 1.25. We will now focus on the 1.2430-level. A break below that short-term support could send the pound lower towards 1.2390 and 1.2340. On the topside, a short-term resistance is now seen at 1.25.
We wish you good trades for today and a beautiful weekend.
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