There was little consistency in the performance of the EUR/USD Tuesday and the euro’s roller coaster ride gave traders no cause for joy. The euro peaked at 1.0816 before it ended the day in negative territory. We went long and short but no movement proved to be sustained. However, the 1.07-support level is still unbroken and as long as the euro remains firmly above that level, we shift our focus to an upside break above 1.0820.
There is no important economic data from the Eurozone today. From the U.S. we have the PPI Report at 13:30 UTC and Industrial Production figures at 14:15 UTC due for release but these reports are not expected to have a dramatic impact on the greenback.
The pound sterling fell towards 1.2380 after a report showed U.K. inflation unexpectedly slowed last month. Meanwhile, BoE policy makers shifted to a neutral stance with Carney saying in testimony that the neutral path is “appropriate” and officials are not considering expansion of any of the Bank of England’s programs. Sterling traders should pay attention to U.K. Employment Report at 9:30 UTC today as any surprises may lead to volatile swings in the GBP/USD. Technically we are waiting for a renewed break below 1.24 in order to sell the pound towards 1.2350. Above 1.2560 however, the bias may shift in favor of the bulls.
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