Forex News: The pair had a choppy session yesterday but overall the bears won the battle and broke 1.1170 after the bounce at the 50 period Exponential Moving Average.
The next destination seems to be the support located at 1.1120, followed by 1.1075. The market has a bearish bias and the US Dollar is strengthening but a clear trend is not in place, so we will probably see moves to the north when price encounters support and the Relative Strength Index becomes oversold. As long as these potential rallies don’t extend past the 50 period EMA, our bias remains bearish.
The economic scene remains slow today, with the U.S. Existing Home Sales being the only notable release. The indicator shows the annualized number of houses sold during the reported month (excluding new houses) and has a medium impact on the US Dollar. The time of the release is 2:00 pm GMT and the expected number is 5.54 million.
The Pound was weakened by dovish comments made by BOE Governor Carney during his speech at the Mansion House, so the pair showed a strongly bearish session yesterday, breaking the first support and even breaching 1.2635.
The minor support at 1.2690 was easily broken yesterday and the pair continued through the more important 1.2635. Now the next destination is 1.2570 and once price gets there, we anticipate a move higher due to the oversold condition of the Relative Strength Index and the fact that the pair traveled a long distance south in a relatively short period of time, without retracement.
Today’s highlight for the Pound will be the release of the British Public Sector Net Borrowing, an indicator that shows the difference between spending and income for the public sector. A negative number shows excess and a positive number shows deficit; today’s forecast is a deficit of 7.3 billion, while the previous was 9.6 billion and usually a lower number strengthens the Pound but the impact is often mild. The time of release is 8:30 am GMT.