Forex News: The US Dollar showed signs of recovery yesterday, a fact that generated a bearish session, with the pair moving back below the psychological level at 1.2000. The economic scene was calm, without notable events.
After the failed break of 1.2070, the pair started to roll downhill and the break of 1.2000 shows that the US Dollar is gaining some momentum. The target for today will be the confluence zone created by 1.1960, the 50 period Exponential Moving Average and the bullish trend line seen on the chart. If the sellers manage to take the pair below this zone, we expect to see more downside movement, possibly into 1.1900 – 1.1875 area but this will probably take more than a day to achieve.
A bounce at the confluence zone mentioned earlier and a break above 1.2000 would show that the retracement is over and would make 1.2070 the next target.
The only notable release of the day is the U.S. JOLTS Job Openings, scheduled at 2:00 pm GMT. As the name suggests, the indicator shows how many jobs are available (excluding the farming sector) and usually strengthens the US Dollar if it posts a higher than expected number but the impact is often mild. Today’s forecast is 5.96 Million, lower than the previous 6.16 Million.
The Pound re-tested the highs reached last week but bounced lower yesterday, showing that the pair is in need of a pullback or a period of consolidation. Overall the session was choppy, without substantial advances.
Price action has established short term resistance at 1.3220 – 1.3225 and as mentioned before, the pair is overextended because it has travelled a long distance in a short period of time. The Relative Strength Index was also overbought and is now moving below the 70 level, indicating that we will see at least a touch of 1.3160. To the upside 1.3220 is the closest resistance, followed by 1.3250.
British inflation data will be released today at 8:30 am GMT in the form of the Consumer Price Index (CPI). The expected change is 2.8%, compared to the previous 2.6% and usually a higher number generates Pound strength; this is a high-impact indicator, thus caution is recommended.