The euro traded higher against the U.S. dollar on stronger Eurozone data, but gains were capped at around 1.0640, the euro’s current resistance zone. The British pound climbed towards 1.5130 but could not hold onto its gains and slipped back to 1.5050. Bank of England Governor Carney did not reveal new signals on monetary policy in his speech yesterday, a reason why the pound lacked direction.
Today’s focus will be on the ADP report and on the speeches of Fed Chair Janet Yellen. The ADP report, which is scheduled for release at 13:15 GMT, is expected to show a slight uptick in job growth. Yellen is due to speak at 13:30 GMT and 17:25 GMT. Dollar bulls are likely to position for a hawkish confirmation, pushing the dollar towards higher levels.
Before this, the U.K. Construction PMI, scheduled for release at 9:30 GMT and Eurozone Consumer Prices, due for release at 10:00 GMT, could have an impact on the GBP’s and euro’s price action.
Traders should pay attention to the resistance and support levels of the cable’s current trading range. Breaking above 1.5140, sterling could be headed for a test of 1.5190. A significant break of 1.5030, however, may reinvigorate bearish momentum towards 1.50 and 1.4950.
We generally expect the euro to trade lower in the near-term. However, if the euro breaks above 1.0640, it could head for 1.0667 – the resistance line. As bullish momentum could be limited, traders should be cautions with any buy attempts.
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