Weekly Analysis: The pair climbed last week, following a comment made by U.S. President Trump regarding a “too strong” US Dollar but most of the rise was erased a day after and the week ended with price close to the opening point.
It is clear now that price reacts to the resistance at 1.0680, as seen from last week’s bounce, but it must be noted that the sellers couldn’t take the pair below 1.0600 so there is not enough traction on either side. The beginning of this week will be affected by the Easter holidays and we will most likely see alternating periods of low and high volatility but strictly from a technical point of view, our bias is bearish as long as the pair remains below the 50 period Exponential Moving Average and below 1.0680 resistance.
Monday most European banks will be closed, celebrating Easter Monday and no major economic indicators will come out. Volatility will most likely be affected and price may move erratically, so caution is recommended.
Tuesday the US Dollar will be affected by the release of the Building Permits, but the indicator lately has just a low-to-medium impact; Wednesday we take a look at European inflation with the release of the Final version of the Eurozone Consumer Price Index. Thursday lacks major releases and the week ends Friday with the German Services and Manufacturing PMIs as well as the U.S. Existing Home Sales. Overall we have a rather slow week ahead of us, without high impact market movers, so the main factor for direction will be the technical aspect.
Last week was mostly controlled by the bulls but the resistance located at 1.2570 stopped the pair’s rise once again. Price remains in a range, without clear control from either side.
The rally was hindered by 1.2570 resistance but the short term momentum belongs to the bulls, so it’s very probable that we will soon see a break of the mentioned level. Until the pair moves outside the channel created by 1.2570 or and 1.2420, we expect to see choppy movement, characteristic to range-bound trading. For the time being, our bias is mostly neutral for this pair but given the US Dollar weakness seen last week, we anticipate a break of 1.2570 resistance.
UK banks will be closed Monday in observance of Easter and the week remains slow until Thursday when Bank of England Governor Mark Carney will deliver two speeches in Washington, one at the Institute of International Finance Policy Summit and the other at a Bank of France event. Friday the British Retail Sales are released, showing changes in the total value of sales made through retail outlets; this is usually a high impact indicator, which strengthens the currency if it posts numbers above expectations.
Written by: Bogdan Giulvezan