Forex News: Yesterday the US Dollar exhibited weakness against most of its counterparts and this allowed the Euro to take the pair higher, above the resistance located at 1.3760. Throughout the day the bulls showed almost complete control of the pair.
Although the bulls are in control of short term movement, the Relative Strength Index on a four hour chart has moved above the level of 70, a fact which indicates an overbought market. This implies that retracements lower might occur today, especially if the pair touches 1.3830. The level of 1.3760 will probably become support and has the ability to reject price higher.
An important US event is scheduled today at 6:00 pm GMT: the FOMC Meeting Minutes which contain details about the latest Fed Meeting and the reasons that influenced the votes regarding the Federal Funds Rate. Hints about future monetary decisions may also be present, a fact which highly influences the US Dollar.
The British Manufacturing Production surprisingly increased from the anticipated 0.3% to 1.0% and the Pound strengthened substantially as a result. The entire day was controlled by the bulls and resistance levels were broken with ease.
Considering the latest strength showed by the Pound, we anticipate a move above 1.6750 resistance but before that can happen, a bearish retracement is expected. The Relative Strength Index is deep in overbought territory, a fact which adds to our belief that a move lower will occur before other advances will take place.
The Pound will be affected today by the release of the British Trade Balance which tracks the difference between imported and exported goods. Although it is considered a medium impact indicator, surprising numbers can move the pair significantly. The release is scheduled at 8:30 am GMT and the anticipated number is -9.3B, an increase from the previous -9.8B. Of course, the FOMC Meeting Minutes will have a direct impact on price direction.