Forex News: The euro-dollar pair had another choppy trading session yesterday and slowly approached 1.0870 where it bounced slightly higher. The German ZEW survey exceeded analysts’ expectations by a small margin and the release didn’t create strong movement.
The pair is still ruled by indecision and doesn’t pick a clear direction. The levels to watch are 1.0800 as support and 1.0945 as resistance but a technical prediction can be made only when 1.0870 is broken and re-tested. The oscillators offer mixed signals and the 50 period Exponential Moving Average is flat, further increasing the uncertainty. As long as price stays above 1.0870 the outlook is slightly bullish for a touch of 1.0945.
The United States CPI comes out at 1:30 pm GMT but is not expected to show any change from the previous 0.0%. Because this is the main gauge of inflation, higher values are beneficial for the US Dollar and can take the pair lower. Today the World Economic Forum (WEF) Annual Meetings start in Davos and will last the whole week so volatility is likely to increase.
Although the British CPI was better than expected, the Pound dropped yesterday to levels last seen in 2009. The release just created brief moments of strength before the pair broke key support.
The break of 1.4230 shows that the downtrend is in full swing and that it is likely to continue, with the first target located at 1.4050. However, this is a very old level and we don’t know how price will react to it (although the last 2 levels were old as well and price bounced briefly); before 1.4050 is reached, we expect the pair to climb into 1.4230 for a re-test from below and a much needed retracement.
The British Claimant Count Change is released at 9:30 am GMT with a forecast of 4.1K (previous 3.9K). The indicator shows the changes in the number of people who applied for unemployment related benefits and usually a higher number is detrimental for the Pound. Keep in mind that the WEF Meetings can have an impact on the pair’s movement.