Forex News: For most of yesterday’s trading session the pair was confined in a tight range after failing to break the previous top. The economic scene was calm and the Jackson Hole Symposium did not trigger notable movement.
The pair is ranging without direction or conviction from either side and we expect this movement to continue until economic data will be released and the two heads of central banks will speak. The levels to watch are 1.1775 as support and 1.1820 – 1.1840 as resistance. The 50 period Exponential Moving Average is another location where we can see an important bounce or break but until something notable happens, the bias is neutral.
The first release of the day is the German IFO Business Climate, scheduled at 8:00 am GMT. This is a survey with a very large sample size of about 7,000 businesses that are asked to give their assessment on current and future business conditions. The survey acts as a leading indicator of optimism and higher numbers than the anticipated 115.5 usually strengthen the Euro.
At 12:30 pm GMT the U.S. Durable Goods Orders come out, showing changes in the value of orders for goods with a live expectancy of more than 3 years. A higher than anticipated number shows increased economic activity and usually strengthens the US Dollar. Today’s forecast is -6.0%, which is a hefty decrease from the previous 6.4%.
Fed Chair Yellen will speak at the Jackson Hole Symposium today at 4:00 pm GMT and ECB President Mario Draghi will speak later at 7:00 pm GMT. These speeches can potentially move the respective currencies strongly, so caution is recommended.
The British Gross Domestic Product matched the market consensus, to the impact of the release was limited. However, most of yesterday’s session was bullish, following a bounce at 1.2770 support.
The Relative Strength Index was oversold, warning that a bullish retracement will soon follow and this happened yesterday, after a near touch of 1.2770. For today we expect to see another move lower and if this move doesn’t break 1.2770, we will probably see a period of bullish movement, with 1.2850 as target.
The Pound will not be affected today by major economic releases so the pair’s direction will be decided by the technical aspect and the U.S. events mentioned above.