Forex News: Friday the pair retraced lower after hitting a high at 1.2092 but most of the drop was due to profit taking by the buyers, not necessarily seller strength. The economic scene was calm and did not have an impact on price direction.
Although the pair breached 1.2070, this resistance is still holding and price is showing signs of rejection. Today we don’t expect to see substantial advances made by either side, but as long as price remains below 1.2040, our bias is slightly bearish; keep in mind that the pair is in an uptrend and this means that all moves down should be considered retracements, not reversals. Price will probably be capped today by 1.2070 to the upside and 1.2000 to the downside.
Neither one of the currencies will be affected by economic data today so the direction will be decided by the technical side.
The Pound was boosted Friday by the better than expected numbers for the British Manufacturing Production (forecast 0.3%, actual 0.5%) and the pair took off, moving past the 1.3200 mark and reaching a high at 1.3223.
The buyers are clearly in control and will probably take the pair into 1.3250 resistance in the near future. However, at the moment price is overextended and the Relative Strength Index is deep in overbought territory, so we expect to see a pullback or at least a consolidation period with price moving in a tight range. If said pullback occurs today, the first support will be represented by 1.3160 but given the lack of economic data, we will probably see a slow session today.
Similar to the other two currencies, the Pound will not be affected by economic releases and the technical aspect will prevail.