Forex News: The pair continued its climb yesterday, mostly fuelled by a better than expected value of the German Consumer Price Index. The U.S. Durable Goods Orders disappointed, contributing to the bullish move.
The pair is headed towards the resistance at 1.0945 but the Stochastic and Relative Strength Index are approaching overbought and this makes us anticipate a drop once the mentioned level is touched. A break of this level would make 1.0980 the next target but the latter is a stronger resistance and probably by then the oscillators will be clearly overbought, increasing substantially the chances of a drop.
Today is an important day for both the Euro and the US Dollar: at 10:00 am GMT the Eurozone Flash Estimate CPI comes out, expected to show a change of 0.4% compared to the previous 0.2%. The CPI is the main gauge of inflation, which has been too low for a relatively long period, thus an increase is likely to trigger Euro strength.
The US Dollar will be affected by the release of the Advance Gross Domestic Product which is the most important version out of the three (Advance, Preliminary and Final). The GDP is an economy’s main measurement of performance and higher numbers usually strengthen the currency; however for today the consensus is a change of 0.8% compared to the previous 2.0%. The release is scheduled at 1:30 pm GMT.
The British Preliminary GDP released yesterday showed a value of 0.5%, better than the previous 0.4% and the Pound reacted by climbing above 1.4350, generating a bullish day.
The break above 1.4350 is a major victory for the bulls and if the level turns into support, we are likely to see an extended move towards 1.4475. The pair is also trading above the 50 period Exponential Moving Average and this increases the probability of a continuation to the upside but once the oscillators will reach overbought, we expect bearish movement to resume. A quick move below 1.4350 would show the initial bullish break was false and would make 1.4230 the first target.
The Pound will not be affected by major economic releases today but the United States GDP will have a direct impact on the pair’s movement.
We hope you had a profitable trading week and we wish you a relaxing weekend.