Forex News: The US Dollar got a breath of fresh air from better than expected ADP Non-Farm Employment Change (actual 237K vs 185K forecast) and Gross Domestic Product (actual 3.0% vs 2.7% forecast). As a result the pair had a bearish session and dropped through 1.1960.
The drop below 1.1960 opened the door for a touch of the confluence zone created by the 50 period Exponential Moving Average and the support at 1.1875. It’s very possible to see a bounce higher if the pair reaches that zone but the oscillators are showing strong downside momentum without being oversold and the US Dollar benefited from positive economic data, so a break of the zone is not out of the question. The overall environment is still bullish but for the time being the bears seem in control.
Today at 9:00 am GMT we take another look at European inflation with the release of the Eurozone Consumer Price Index (anticipated change 1.4%) and later in the day the US Dollar will be affected by the Chicago PMI. This is a survey that acts as a leading indicator of economic health, derived from the opinions of purchasing managers from the Chicago area and higher numbers usually strengthen the greenback but to a limited extent. The time of release is 1:45 pm GMT and the expected value is 58.7.
Positive economic data coming from the U.S. strengthened the US Dollar initially but most of the gains were erased later in the day and several candles with long wicks appeared.
The long wicks shown by the last few candles are a clear sign of rejection and the signal is even stronger because it happened right on the 50 period Exponential Moving Average. This suggests that today we will see a bounce from the 50 period EMA and a potential move into the previous top at 1.2980. A drop through the Moving Average would invalidate this scenario, making 1.2850 the next target.
The United Kingdom didn’t schedule any economic data releases for today, so the pair’s direction will be decided by the U.S. data and the technical aspect.