Forex News: Friday was a bullish day for the pair and the US Dollar took a hit from disappointing U.S. Retail Sales (expected change 0.1%, actual change -0.2%). The pair moved above the 50 EMA but failed to close the week above 1.1960 resistance.
The latest move up lacks momentum and price action is showing rejection after breaching through 1.1960 resistance. The long wicks of the last few candles are a sign that price is about to bounce and move lower, towards 1.1900 but if the bears fail to take the pair below the 50 EMA, we will probably see a move above 1.1960 and closer to 1.2000. We don’t expect substantial movement today, due to the lack of major economic releases.
The European Final Consumer Price Index is today’s only notable release, scheduled at 9:00 am GMT and expected to show a change of 1.5%. This is the main gauge of inflation in the Eurozone but the impact of the Final version is rather dim because the Flash Estimate version and German inflation numbers were already released. Nonetheless, higher numbers usually strengthen the Euro.
The Pound soared Friday after a member of BoE’s Monetary Policy Committee stated that we are approaching a rate hike. This added more fuel to the Pound rally, taking the pair to the highest level since the Brexit referendum.
The pair reached a high at 1.3616 and had its best week in a long time but moves like the one seen Friday are usually followed by a pullback or at least a period of consolidation. The Relative Strength Index is deep in overbought territory, thus adding to the probability of a move lower but we don’t expect price to retrace too low because the bulls are clearly in control. The first potential support is located at 1.3450 but it’s unlikely that the pair will reach it today.
The Pound will not be affected today by economic data releases, thus price direction will be determined by the technical aspect.