Forex News: The Euro pushed higher yesterday and moved the pair to a high of 1.2070 before retreating into 1.2000 area. The growing political tension generated by North Korea’s missile launch over Japan’s airspace contributed to the volatile movement.
Although some of the gains were erased in the latter part of yesterday’s trading session, the pair holds firm above 1.2000 psychological level and the general outlook remains bullish. It is possible to see the pair continue lower into 1.1960 area (RSI is overbought and coming down) but the extent of the move should be limited. To the upside the first resistance is 1.2040 (July 2012 low), followed by yesterday’s high at 1.2070.
The German Preliminary Consumer Price Index will be released today at 12:00 pm GMT, with an anticipated change of 0.1%. This is the main gauge of inflation and considering that the German economy is one of the more important in the EU, we expect quite a hefty impact on the Euro (higher than anticipated numbers usually strengthen the currency).
On the US Dollar side we have the ADP Non-Farm Employment Change (forecast 186K), scheduled at 12:15 pm GMT and the Preliminary Gross Domestic Product (forecast 2.7%) that will be released 15 minutes later, at 12:30 pm GMT. The former indicator shows changes in the total number of employed people excluding Government and the farming sector, while the latter is the main gauge of an economy’s performance. Higher numbers for any or both of these indicators usually strengthen the US Dollar, thus taking the pair lower.
The US Dollar was surrounded yesterday by unrest coming from geopolitical tensions and the pair continued its ascent, breaking 1.2950 resistance; however, most of the Pound gains were erased later in the day.
Price is now moving south after a break of 1.2950 resistance that failed to reach 1.3000 psychological level and the Relative Strength Index is moving lower after visiting overbought territory. These are bearish signs that show that we might see a drop into 1.2900 and possibly into the 50 period Exponential Moving Average but as long as price doesn’t break these two support levels, the picture remains bullish for a move into 1.3000.
The British Net Lending to Individuals will be released today at 8:30 am GMT and expected to show a value of 5.3 Billion. The indicator shows changes in the value of credit issued to individuals and usually has a low-to-medium impact on the Pound, with higher numbers strengthening it.