Weekly Analysis: For the entire last week price moved lower at a slow but steady pace. The economic data was mixed and price action was affected by the approaching of the Easter Holiday.
The slow bearish grind is likely to continue until 1.1100 is touched but here we expect brief retracements to the upside. The 50 period Exponential Moving Average is in close vicinity of the mentioned support level, thus creating a confluence zone that will be hard to break by the bears, so the chances of a move up will increase here. Overall the pair is in a ranging period, without a clear trend and the Daily Stochastic is moving down, coming out of overbought; this increases the chances of an extended bearish move but neither side is in clear control and price will be affected by the
Monday European banks will be closed in celebration of Easter Holiday and overall liquidity will be thin and price action irregular. Tuesday the focus is on the US Dollar for the release of the Consumer Confidence survey and the same day, Fed Chairwoman Janet Yellen will deliver a speech titled Economic Outlook and Monetary Policy.
Wednesday the German Preliminary Consumer Price Index is the main indicator on the Euro side, while the US Dollar will be affected by a first look into the American employment situation with the release of the ADP Non-Farm Employment Change.
Thursday European inflation takes center stage again as the Flash Estimate version of the CPI is released but the most important event of the week takes place Friday: the release of the U.S. Non-Farm Payrolls. This is widely considered the main gauge of employment in the U.S. and shows how many new jobs were created during the previous month. Usually the US Dollar moves strongly when this indicator comes out, so use caution at the time.
Last week the bears took back control and erased all losses incurred a week before, taking price into the support at 1.4050 and generating a strongly bearish week.
Although the long term downtrend is severely weakened, the buyers cannot make significant advances and the pair is not making higher highs, a fact which suggests that we will see moves lower in the near future. The first barrier is represented but the support at 1.4050, followed by the important low at 1.3835, while to the upside the 50 period Exponential Moving Average represents the first potential resistance. The oscillators are rather mixed, slightly biased towards the short side.
The Pound has a slow week ahead and only a couple of events have the potential to become market movers: Thursday Bank of England Governor Mark Carney will hold a press conference in Tokyo at the Financial Stability Board Plenary meeting. As always when heads of central banks speak publicly, caution is advised because the respective currency may show irregular movement and possibly sharp turns.
Friday the British Manufacturing Purchasing Managers’ Index is released, showing the state of the manufacturing sector according to the opinions of purchasing managers from said sector. Better numbers usually strengthen the Pound but the impact is sometimes muted. Throughout the week, the pair will be directly affected by the U.S. indicators, mainly the NFP.
Written by: Bogdan Giulvezan