Forex News: Friday’s US data was mixed and did little to stop the assault of the Euro, which was boosted by positive news coming from the German political scene. The pair climbed strongly for the entire day, finishing the session more than 150 pips higher.
The pair is on a massive bull run and is headed towards the long term resistance at 1.2280 but until it gets there, we will most likely see a pullback. Usually after a strong climb price tends to retrace or to consolidate in a tight range due to profit taking (buyers close their positions by selling). The Relative Strength Index is also overbought, increasing the chance of a move lower but after the possible retracement is over, we expect higher prices.
Today banks in the United States will be closed in observance of Martin Luther King Day and no economic data will be released. Also, Europe will not release any data today and this may lead to a slow, ranging session.
Friday the US Dollar remained under heavy selling pressure for the entire trading session and the pair posted massive gains, reaching a high at 1.3745.
The overall environment is clearly bullish but today it is very possible to see a move lower, basically for the same reasons as outlined above. The Relative Strength Index is overbought and usually after a strong move up, price tends to retrace south due to profit taking. After the pullback is complete we expect the pair to move higher unless the US Dollar gets a boost from unexpected news.
Similar to the Euro and US Dollar, the Pound will not be affected today by any important economic releases, so the technical aspect will prevail.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.