Forex News: The ECB didn’t alter the rates but the Euro strengthened during Mario Draghi’s press conference and the pair approached the previous high. The ECB revised lower their inflation expectations but the forecast for economic expansion has increased to 2.2% from 1.9%.
The pair pushed above 1.2040 and approached the previous high at 1.2070 but the Euro gave back some of the gains and price returned below 1.2040. Although the pair retraced lower, our outlook remains bullish, anticipating another move above 1.2040 and a test of 1.2070. It must be noted that the Relative Strength Index is very close to overbought and this fact combined with the resistance at 1.2070 may trigger a move down if the pair climbs into that zone or even before.
Today we have a slow day for both currencies, without any notable economic data releases. Price direction will depend mainly on the technical aspect but we will probably see more of the effects of Draghi’s comments from yesterday’s press conference.
The Pound continued to push higher yesterday and the pair reached our projected target at 1.3100. The rally in the EUR/USD played an important role, dragging the US Dollar lower and allowing the Cable to rise.
Price is likely to breach 1.3100 but we expect to see a retracement lower soon after. The Relative Strength Index is overbought again, as well as the Stochastic and the pair is facing resistance, so the possibility of a pullback shouldn’t be ruled out even if currently the pair is showing strong upside momentum.
The British Manufacturing Production numbers will be released today at 8:30 am GMT, showing changes in the total value of goods produced by manufacturers. The forecast is a change of 0.3% compared with last month’s 0.0% and higher numbers show increased economic activity, strengthening the Pound.