Forex News: The German Consumer Price Index posted a lower than expected value, weakening the Euro and allowing the bears to take control of the pair and to take price below 1.3830.
In light of recent events it looks like the resistance at 1.3900 will not be tested soon as the pair seems to be headed towards 1.3760 support. If this move does occur, the first barrier which needs to be broken is the support at 1.3790 but a lot depends on the value which will be posted today by the European CPI so the technical aspect will be somewhat secondary.
The European Consumer Price Index, which is the region’s most important inflation measure, will be released today at 9:00 am GMT and expected to increase from the current 0.5% to 0.8%. The ECB tries to maintain inflation just below 2% so the current value is considered too low and a figure which doesn’t meet or surpass expectations will most likely weaken the Euro. The ADP Non Farm Employment report will be released at 12:15 pm GMT and although it doesn’t have the huge impact of the government issued indicator (which comes out Friday), numbers above 203K will have a positive impact on the US Dollar.
At 12:30 pm GMT the US Gross Domestic Product is released and a decrease is anticipated: 1.2% from last month’s 2.6%. Such a drop would signify a slower economy, with decreased activity, thus weakening the greenback. Later in the day, at 6:00 pm GMT the US Interest Rate is announced (no change anticipated from the current <0.25%), together with the FOMC Statement which will outline the reasons which stood behind the rate decision and will also show if the Fed will further trim the monetary stimulus (also known as quantitative easing).
Yesterday’s main event for the Pound was the release of the Gross Domestic Product which showed a lower value than analysts expected and this took the pair lower; soon after, the bulls took price back up, creating a difficult to trade environment.
The pair had a mixed day yesterday, with a lot of sharp turns and no clear direction but another move below 1.6820 would be indicative of bear strength and would suggest the uptrend is severely weakened. The Relative Strength Index doesn’t show an extreme condition of the market and price action does not favor a specific direction so today the pair’s movement will be highly affected by the fundamental aspect of the market.
Although today the United Kingdom doesn’t release major data, the day will probably have strong movement as the US events will most likely have a huge impact on price direction.