Forex News: Yesterday’s trading session was rather choppy and price retraced after a spike above 1.1875 resistance. The U.S. Non-Manufacturing PMI showed a disappointing figure and this further weakened the US Dollar, bringing the pair close to resistance.
Currently the pair is testing 1.1875 resistance for the second time is a short while, with the Relative Strength Index showing an overbought condition. A deeper pullback is long overdue and the uptrend is overextended so we may see a move into 1.1775 and possibly into the 50 period Exponential Moving Average if 1.1885 barrier is not broken decisively. However, the main catalyst for today’s price action will be the U.S. jobs data and before the release we may experience choppy movement.
All eyes will be on the US Dollar today for the release of the U.S. Non-Farm Employment Change (also known as the Non-Farm Payrolls). This report is widely regarded as the most important jobs data for the United States and its release triggers strong movement almost all the time. More employed people means that consumer spending is likely to increase in the near future and this in turn strengthens the US Dollar. The time of release is 12:30 pm GMT and the expected change is 181K (previous 222K).
The Bank of England kept the rate unchanged as expected but lowered inflation expectations and Governor Mark Carney was dovish during the press conference that followed. These were the main reasons why the pair posted a strongly bearish session yesterday.
The pair dropped into the 50 period Exponential Moving Average but the current candle shows a long wick in its lower part, suggesting rejection. If price remains below the 50 EMA and below 1.3160, we can expect a touch of 1.3100, but the technical aspect will be secondary to the U.S. employment data released today.
There are no major events on the Pound’s calendar for today, so the pair’s direction will be mainly influenced by the U.S. Non-Farm Payrolls and to a lesser extent, by the technical aspect.