FOREX NEWS: VOLATILITY TONING DOWN AFTER YESTERDAY’S STORM
EUR/USD
Forex News: Yesterday’s price action offered us a huge surprise in the form of a 250 pips rise followed by a massive drop of more than 120 pips. The disappointing numbers posted by the US Retail Sales triggered US Dollar weakness and the initial climb, while the move south that followed is mainly attributed to technical reasons.
Technical Outlook
Under normal circumstances the massive climb could bring in more buyers but the long wick of the candle signifies rejection and makes the picture unclear. For the moment we recommend caution as the pair’s next direction is uncertain. Yesterday’s high at 1.2886 will act as the first resistance while the level at 1.2750 could provide some support but can also turn into resistance if price moves below it. In this latter case, 1.2660 will become first support.
Fundamental Outlook
At 2:00 pm GMT the Philly Fed Manufacturing Index is released and expected to decrease from last month’s 22.5 to 19.9. This is a leading indicator of economic health based on the opinions of about 250 manufacturers from the Philadelphia district and higher than expected numbers usually strengthen the US Dollar.
GBP/USD
British unemployment data was worse than anticipated but the main event of the day was without a doubt the US Retail Sales release which triggered tremendous volatility.
Technical Outlook
The pair touched 1.6060 resistance and immediately dropped, creating a major whipsaw. For the time being, the downtrend is still in place as we don’t have a higher high but a lower low was printed. For today we expect the pair to remain between 1.6060 resistance and 1.5900 support, but given the latest strong movement, a breakout is possible as well.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for the day so focus will be shifted towards the United States and the technical aspect.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
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