Forex News: After coming very close to the resistance at 1.1840, the pair dropped more than 100 pips due to dovish comments made by ECB President Mario Draghi. The ECB maintained the interest rate unchanged, as expected.
Yesterday’s move took the pair below the 50 period Exponential Moving Average and broke two support levels, showing that short term control belongs to the sellers. Although the latest move was strongly bearish, the pair is still considered in a range from a longer term perspective. The first place where a bounce higher can happen is the support at 1.1700, followed by 1.1670 but the chances of a climb will increase once the Relative Strength Index enters oversold.
At 12:30 pm GMT the Advance version of the U.S. Gross Domestic Product will be released, showing annualized changes in the total value of goods and services generated by the economy. This is the main gauge of an economy’s performance and the Advance version is the first in a series of three, thus it tends to have the strongest impact. The expected change is 2.5% and higher number are beneficial for the US Dollar.
Yesterday the pair retraced some of the gains made a day before and descended again into the 50 period Exponential Moving Average, partly due to recovery signs shown by the US Dollar.
Lately we’ve seen increased volatility but the pair is still inside a range, without a clear bias. For today we expect to see a move into 1.3160, where action will probably stall while market participants decide the next move. An important role will be played by the U.S. Advance GDP but as long as price is trading below the 50 Exponential Moving Average, the technical bias is slightly bearish.
The United Kingdom didn’t schedule important economic data releases so all eyes will be on the US Dollar for the GDP numbers.