Forex News: Despite a worse than expected value shown yesterday by the German IFO Business Climate (actual 107.3; forecast 108.5), the Euro strengthened and the pair failed to break the support at 1.0800.
Even if yesterday price bounced at 1.0800, we still maintain our bearish bias and anticipate a break of this level. The upside movement is likely to continue until the 50 period Exponential Moving Average is touched but there the chances of a drop will increase because the level at 1.0870 is in close vicinity of the moving average, offering an even stronger resistance. A move above 1.0870 would make the short term bias bullish.
The only notable event of the day is the release of the US Consumer Confidence survey, scheduled at 3:00 pm GMT. This survey has a large sample of about 5,000 American households and tries to measure confidence regarding the overall economic situation. If confidence among consumers grows, the retail sales are also likely to follow and that’s why this survey acts as a leading indicator of consumer spending. The forecast is 96.6 and higher numbers usually strengthen the US Dollar.
The Pound showed mixed price action yesterday, moving above and below the Moving Average and bouncing at support. The lack of economic data contributed to the choppy session.
The pair is testing the level at 1.4230 which has now turned into support after an almost perfect bounce higher. However, the Stochastic is moving lower, coming from overbought territory and the pair is under serious downtrend pressure so we expect the mentioned level to be broken today and price to head into the next support, located at 1.4125. First horizontal resistance is located at 1.4350 and will probably reject price in case of a bullish move.
Bank of England Governor Mark Carney will testify today before the Treasury Select Committee, at 10:45 am GMT. The topic will be the Financial Stability Report and the Pound is likely to have increased volatility during the speech but the direction will depend on the Governor’s attitude and answers.