Forex News: The Durable Goods Orders posted a much better than anticipated reading yesterday and this was part of the reason why the US Dollar strengthened and took the pair into support. Also, the Euro was overbought and this contributed to the pullback.
The pair was overbought for a long time so a retracement was needed but the uptrend remains strong so overall our bias is bullish, anticipating another climb. A good place for the upside movement to resume is the current level at 1.1685 but if this barrier is broken, we expect to see a drop into the 50 period Exponential Moving Average. The fundamental side will also play an important role today.
There are two important releases today: the first is the German Preliminary Consumer Price Index, scheduled at 12:00 pm GMT and expected to show a change of 0.2%, same as previous. The second indicator is the U.S. Advance version of the Gross Domestic Product, scheduled at 12:30 pm GMT; the expected change is 2.5%, which is a big increase from the previous 1.4%. This version is the most important out of the three (Advance, Preliminary and Final), so its impact tends to be the highest.
The bulls made another push yesterday but upside momentum finally faded and the US Dollar got a boost from positive economic data, thus the pair dropped later in the day.
Yesterday’s price action established 1.3160 as resistance, so this level will act as a target if bullish action resumes. The bearish break of 1.3100 shows that the balance is tilting towards the US Dollar, at least in the short term. Depending on the U.S. GDP reading, we expect to see a drop into the 50 period Exponential Moving Average, but a quick return above 1.3100 will make 1.3160 the first destination.
Similar to the rest of the week, the Pound has a light day ahead, without anything notable on the economic calendar, so the pair’s direction will be decided by the technical aspect and by the US Gross Domestic Product.