Forex News: Friday the CORE version of the U.S. Retail Sales indicator showed a worse than expected value, weakening the greenback and allowing the pair to climb. However the Euro lacks strength and the bullish move stopped at resistance.
Although 1.0945 was broken, the pair stopped and reversed once 1.0980 was touched and now it is trading once again below resistance. Lately price action is choppy and all moves are quickly exhausted so today we expect a descent into 1.0870. As an alternate scenario, we might see another climb but we don’t expect 1.0980 to be broken decisively. The oscillators show mixed signals and don’t hold enough information, thus contributing to the fogginess of the overall picture.
Today the United States celebrate Martin Luther King Day so banks are closed and no indicators are released. Europe didn’t schedule any economic data releases either so we expect a day with potentially low volatility.
Friday the pair continued its descent, approaching the near 6-year low at 1.4229 although the U.S. Retail Sales somewhat disappointed. This further shows that the Pound is weak and that more downside action will follow.
The pair is approaching a very important level, where price bounced higher in 2010 and the strength of this level combined with the oversold condition of the Stochastic and Relative Strength Index suggests that a move up is next. The first target is the potential resistance located at 1.4350 but keep in mind the overall trend is bearish and a break of 1.4230 is not out of the question.
Similar to the United States and the rest of Europe, the United Kingdom didn’t schedule any economic indicators for today, so the pair’s direction will be influenced by the technical aspect.
Written by: Bogdan Giulvezan