Forex News: The pair remained almost flat yesterday, moving in a very narrow range. The US Non Manufacturing PMI posted a value that exceeded estimates, but its release didn’t create a lot of volatility although some strength was exhibited by the US Dollar.
Yesterday’s ranging price action doesn’t help to determine the next direction and for the time being, we must wait for stronger moves which will reveal if the power lies with the bulls or with the bears. If price fails to move soon above 1.3900, it would be an indication that bears are entering the market and that 1.3830 will be touched again.
The day’s headline is the release of the US Trade Balance (12:30 pm GMT) which represents the difference between imported and exported goods. A value above zero shows that United States exports surpass imports but the current value is -42.3 billion US Dollars, a clear deficit; the anticipated value is -40.1 billion US Dollars and any figures closer to zero will most likely strengthen the greenback.
United Kingdom banks were closed yesterday and the pair had similar movement to EUR/USD, trading in a small range, with some Dollar strength seen once positive data was posted by the US economy.
Today we will most likely see stronger moves and we expect another attempt to break the level at 1.6880. After the top at 1.6920 was printed, the bulls didn’t manage to take price in that area again and this may be an indication that exhaustion is present and that bears are trying to take control of the pair. If today 1.6880 is not broken decisively, the first potential target is 1.6820.
At 8:30 am GMT the Services PMI is released by the United Kingdom and expected to increase slightly from 57.6 to 57.9. The indicator is a survey of purchasing managers from the services sector, which shows their optimism regarding business conditions so better than estimated values are beneficial for the Pound.