While both of our major currency pairs fluctuated more or less sideways yesterday, the U.S. dollar was gaining momentum as upbeat economic data boosted optimism on the world’s largest economy. A gauge of consumer confidence rose to its highest level in nine years, coming in as a positive surprise for the market.
The euro tested the 1.12-support but, for the time being, the currency was able to remain above that important price level. Once the 1.1190-level is significantly breached, we may see accelerated bearish momentum towards 1.1130. However, given the recent sideways trend in the EUR/USD we anticipate the price action to be confined to a range between 1.1285 and 1.1120.
The pound sterling rebounded against the greenback Tuesday and rose to a high of 1.3026. While we expect any further gains in this pair to be limited until 1.3070, downward movements may also be limited towards the lower bound of the pounds recent trading range at 1.2920. Once the 1.29-mark is breached to the downside, we could see further losses towards 1.2820.
Today, we will watch U.S. Durable Goods Orders, scheduled for release at 12:30 UTC, which could have a major impact on the U.S. dollar. Furthermore, Fed chair Janet Yellen testifies before the House Financial Services Committee at 14:00 UTC. Market participants scrutinize her remarks, looking for clues regarding future monetary policy but Yellen is not expected to reveal anything new after last week’s news conference.
ECB President Mario Draghi is scheduled to speak at 14:30 UTC at a meeting of the German Parliament’s EU Committee, but his speech is not expected to have a significant impact on the euro.
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