Forex News: The pair continued to move without clear direction yesterday and the slightly better than anticipated value of the US Existing Home Sales didn’t trigger a sharp drop even if some US Dollar strength could be seen at the time of the release.
Although the picture is not clear and movement is rather ranging, we can notice some rejection off 1.3830 resistance, which is a sign that 1.3760 might be touched today. We slightly favor the down side but we acknowledge the fact that yesterday’s price action is not very conclusive. The Euro Zone will release 2 economic indicators today so the pair’s direction will be influenced by them, especially because the technical aspect is unclear.
France announces the Manufacturing PMI at 7:00 am GMT. Analysts expect a very small increase from 51.8 to 51.9 and higher values usually strengthen the Euro since the indicator acts as a gauge of optimism among purchasing managers who activate in the Manufacturing sector. At 7:30 am GMT, the German Manufacturing PMI is released and expected to increase from 53.7 to 53.9.
The US New Home Sales numbers come out at 2:00 pm GMT, with an increase anticipated: 455K from the previous 440K. A higher number than forecast could take the pair lower on the back of greenback strength.
Slowly but surely the Pound climbed above the major resistance located at 1.6820 and the better than expected value of the US Existing Home Sales couldn’t generate enough downward momentum to bring price below the mentioned level.
The Relative Strength Index on a four hour chart is approaching the level of 70 which indicates an overbought condition of the market; although this is not a sign of clear reversal on its own, it makes further advancements more difficult. We favor a move below 1.6820 unless the bulls can show a quick and clear proof of strength (clear move above the mentioned level). The first support level is located at 1.6750.
At 8:30 am GMT the Minutes of the latest Bank of England Meeting are released. The document will outline the reasons which stood behind the Interest Rate decision and will contain the breakdown of the members’ votes. The Minutes also allow traders to see how many members are changing their stance regarding the value of the interest rate, thus offering clues about future rate direction.