Bulls take control of both major currency pairs, although the British pound struggled with an extension of its recent gains. As noted in previous analysis, we still expect the pound to come under renewed pressure in the near-term and we anticipate a drop towards 1.4280 and 1.42. The technical picture is discussed later on. The euro, however, tested the 1.14-barrier after the 1.13-support has proved to be resilient.
All eyes will be on the U.S. Payroll report scheduled for release at 12:30 GMT today. Nonetheless a strong report probably wouldn’t be a game changer for the Fed’s outlook after Mrs. Yellen sent a clear signal to proceed cautiously. In case of a strong labor market report the highest importance is attached to a much-needed acceleration in wage growth. Average hourly earnings must show an uptick in order to revive any strength in the U.S. dollar. However, if wages fail to show acceleration the greenback could suffer further losses.
Furthermore the most important leading indicator for payrolls – the ISM Manufacturing index – is only due for release after the jobs report (14:00 GMT) but could still affect the price action in the USD.
Let’s have a look at the technical picture:
It all depends on the demand for USD but given the recent uptrend channel upside movements could be limited until 1.1420. Once the euro breaks above 1.1430 it could head toward the key resistance at 1.15. However if NFP numbers are strong the dollar could strengthen, leading to a correction in the recent uptrend. Current supports are seen at 1.13 and 1.1220, but given the bullish bias euro bulls are likely to buy any pullback.
After peaking at 1.4459 the pound favored the downtrend and is now facing an important support at 1.43. Once this support has been significantly breached to the downside, we expect the pound to drop towards 1.4250 and 1.42. Below 1.4190 it could even decline towards 1.4150 and 1.4060. After the break above 1.44 turned out to be unreliable for sterling bulls, it might be better to wait for prices above 1.4435 and further 1.4465.
We wish every trader profitable trades.
Have a nice weekend.
Daily Forex signals:
View our daily signal alerts http://www.maimar.co/category/daily-signals/
Subscribe to our daily signal service http://www.maimar.co/signals/
We wish you good trades and many pips!
Any and all liability of the author is excluded.
Copyright © All Rights Reserved 2016 Maimar-FX.