moved below the 50 days EMA). This uptrend combined with the oversold position of the Relative Strength Index and the long wicks of the last few candles, suggests that we are likely to see a bounce higher from the current support zone at 1.1713 – 1.1700. We have important data coming out today and this will play a big role for direction.
At 12:00 pm GMT the German Preliminary Consumer Price Index comes out, showing changes in the price that German consumers pay for the goods and services they purchase. The CPI acts as the main gauge of inflation and higher numbers usually strengthen the Euro.
At 12:30 pm GMT the U.S. Final Gross Domestic product will be released and expected to show a reading of 3.0%, same as previous. This is the main gauge of economic performance, thus higher numbers usually generate strength for the US Dollar.
Yesterday the pair remained below the previous support at 1.3450 and below the 50 period Exponential Moving Average for the entire trading session but in the afternoon some of the gains were erased and small bounces occurred.
Yesterday’s price action shows that the break of 1.3450 support wasn’t fake, so now we can expect to see a longer period of downside movement, with 1.3300 as first target. The break of the confluence zone (1.3450 and the 50 period EMA) is an important victory for the bears but there’s still enough buying pressure in the market so we cannot rule out a re-test of 1.3450 or even a break.
At 8:15 am GMT, BOE Governor Carney will deliver an opening speech in London at the Bank of England's conference celebrating 20 years of independence. As a rule of thumb, all speeches of heads of central banks should be treated with caution but of course the exact impact is not known.