It has been a profitable start to the new week with Sterling trading sharply higher against the U.S. dollar and the DAX steadying above 15200.
GBP/USD: The cable rose to a high of 1.3777 and provided shot-term bulls a good gain. Another break above 1.3775 could now lead to a test of 1.38 and further 1.3835. Below 1.3720 however, sterling could give up gains towards 1.3680. Bears in this pair should wait for a third test of 1.3670 which could consequently result in a clear break and steeper losses towards 1.36.
DAX: Volatility remains at muted levels with the index ranging in narrow price spans between 15280 and 15180. We generally favor the uptrend with a next higher target at 15850 but traders should also brace for potential corrections towards 15000 (blue rectangle). The 15000-zone could be a tempting entry area for bulls.
EUR/USD: The euro traded in a narrow price range and we will wait for a renewed break above 1.1920 in order to anticipate higher targets between 1.1970 and 1.1990. A bearish break below 1.1860 however, could drive the pair lower towards 1.1830.
Today we will have the U.S. CPI report scheduled for release at 12:30 UTC and if there is a strong upside surprise, the U.S. dollar will rise.
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