Forex News: The pair remained inside the range for the entire yesterday’s trading session, mostly due to the lack of any fundamental developments or economic data releases. Trading was choppy and without important advances to either side.
The balance of power doesn’t favour either side as long as price remains confined inside the channel created by 1.2195 support and 1.2280 resistance. Usually when a horizontal channel is broken, price continues to move in the direction of the break for an extended period of time and because an uptrend is in place, we favour a bullish break, followed by upside movement. Today’s price action will likely be influenced by the WEF Meetings, so caution is advised.
The German ZEW Economic Sentiment will be released today at 10:00 am GMT, showing the opinions of about 300 German investors and professional analysts about a 6-month outlook for the German economy. The survey acts as a leading indicator of economic health but the impact is not always notable; nonetheless, numbers above the expected 17.8 can strengthen the Euro. Also, today is the first day of the World Economic Forum Annual Meetings held in Davos.
The bias was mostly bullish yesterday and the Pound bulls made notable advances, breaking the previous top at 1.3942.
The break of 1.3942 marks the resumption of the uptrend and indicates that higher prices will probably follow. The next major hurdle is the psychological resistance at 1.4000, which is a big, round number that will very likely generate a bounce lower if it’s touched. It must be noted that the Relative Strength Index is again close to overbought and this increases the chances of a move lower.
The Pound will not be affected by major economic data today but United Kingdom representatives will attend the WEF Meetings and this may be a reason for increased volatility.