The British pound was the worst performer the past week, falling about -1.2 percent against the U.S. dollar. To the surprise of the market, the Bank of England decided to keep interest rates on hold, which has led to a significant drop in the cable. With no fundamental support from the BoE and the threat of recession in the U.K., the outlook for the pound remains bearish so far. A next lower target is now seen at around 1.2170. Below 1.2140, the focus shifts to the crucial support at 1.20. A short-term resistance is however seen at around 1.2330.
Also, the EUR/USD remained in its recent downtrend. We will focus on a potential trading range between 1.0750 and 1.05.
As for the economic docket this week, traders should closely watch the U.S. PCE Index figures due for release on Friday.
DAX – Downside breakout in the making?
The index is hovering above 15450 after failing to break the 16000-mark again. Traders should watch out for a break below 15400 that could lead to a sharp drop towards 14700-14500. On the other side, we expect a current resistance zone to come in between 15850 and 15650.
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