Weekly Analysis: Last week the pair remained in a relatively tight range, moving above and below the 50 days Exponential Moving Average, which is flat thus confirming the lack of momentum.
The pair spent another week inside the horizontal channel created by 1.1875 resistance and 1.1700 support but Friday we saw that price approached the upper part of the channel and then bounced lower. This may be a sign that we are headed towards 1.1700 once again but overall the pair is range-bound and neither side is in clear control.
The first day of the week lacks major announcements for any of the two currencies and action picks up Tuesday with the release of the Eurozone Manufacturing and Services PMIs, which are surveys derived from the opinions of purchasing managers regarding business conditions in the respective sector.
Wednesday’s highlight will be the release of the U.S. Durable Goods Orders, an indicator that shows changes in the total value of orders for goods with a life expectancy of more than 3 years. Thursday will be the most important day of the week for the Euro as the ECB will announce their interest rate and soon after, ECB President Mario Draghi will hold his usual press conference, which is known to be a major market mover.
The trading week ends Friday with the release of the U.S. Advance Gross Domestic Product, which is the first version in a series of three and thus tends to have the strongest impact. The GDP is an economy’s main gauge of overall performance, so higher numbers usually strengthen the currency.
The pair continued lower after bouncing at 1.3350 resistance, mostly because British inflation data wasn’t as good as some expected and BOE Governor Carney didn’t show a hawkish stance.
Price descended below the 50 days Exponential Moving Average, which makes the bias bearish but the last daily candle is showing a long wick in its lower part, which is a sign of rejection. If the 50 days EMA and 1.3250 resistance can stop this upwards momentum, then we will probably see a touch of 1.3050 this week, otherwise the pair will be headed for 1.3350.
Only two notable releases will affect the Pound this week, both scheduled Wednesday: the Preliminary GDP (main gauge of economic performance as mentioned prior) and the Inflation Report Hearings, during which BOE Governor Carney will testify on inflation before Parliament's Treasury Committee. As always, the U.S. releases will have a direct impact on the pair’s movement.
Written by: Bogdan Giulvezan