Forex News: Yesterday the economic scene was calm and without any major data releases; however, the pair continued higher at a relatively slow pace and touched the 50 period Exponential Moving Average.
The last few bullish candles are showing wicks in both their upper and lower parts, which may suggest that the retracement started at 1.1735 is coming to an end. If the 50 period EMA is surpassed, we expect to see a move into 1.1825 but at the moment it seems like the pair is lacking the strength to break that mark. A bounce lower at the 50 EMA will make 1.1735 the new target.
The German ZEW Economic Sentiment will be released today at 10:00 am GMT, showing the opinions of about 300 German analysts and investors regarding a 6-month outlook for the German economy. This is an indicator of economic health and optimism, thus higher numbers than the anticipated 17.9 can strengthen the Euro but the impact is usually medium.
Later in the day, at 1:30 pm GMT the US Producer Price Index will come out, showing changes in the price that producers charge for their goods and services. The forecast is a change of 0.4% and higher numbers strengthen the US Dollar because the indicator has inflationary implications.
The pair had a choppy trading session yesterday, amid a lacklustre economic environment. Neither side was in clear control but an early climb was quickly reversed.
The bulls tried yesterday to move price above the 50 period Exponential Moving Average and 1.3410 resistance but the attempt resulted in a long rejection candle and a drop into the support at 1.3360. The pair’s direction today will be heavily influenced by the British inflation data, so the technical aspect will be somewhat secondary but if the pair stays below the 50 EMA, we expect to see a drop into 1.3320.
At 9:30 am GMT the British Consumer Price Index will be released, showing changes in the price that consumers pay for the goods and services they purchase. This is the main gauge of inflation, so higher numbers usually strengthen the Pound. The expected reading is 3.0%, same as previous.