Euro and Pound remain on their bullish uptrends for the time being

General market theme
Price action in the major instruments we monitor continued on the same tune yesterday with the US Dollar remaining in the backseat and the likes of Euro and Pound benefiting from it. Like we discussed earlier in the week Fed’s concerns about the domestic economy are taking their toll on the US currency and the European majors are gaining against it even though we didn’t see any fundamental developments or news to support their uptrends. To sum it up we believe that the gains in the Euro and the Cable are more based on Dollar’s weakness rather than on their own strength so we need to remain vigilant in case momentum dies down.

Price action highlights
Continuing from our comments above the Euro edged higher yesterday and overnight the currency pair managed to reach the 1.1400 level on the back of the weakening US Dollar. Pending Eurozone unemployment figures and inflation levels are not expected to have much of an effect on the Euro even though expectations make word for a potentially bearish release. As long as the Dollar doesn’t receive renewed support from traders the Euro should remain well bid and any corrections will likely stop around the 1.1350 area if the uptrend in the Single currency is to go on.

The Cable printed a new high reaching the 1.4650 area overnight at the ending hours of the Asian session but it is clear that the momentum in the UK currency is diminished. This might hint towards a potential correction in the Cable that has gained significantly in the last few sessions but for that to take place a break below the 1.4500-50 area is needed and there are no news or reports pending for release today to fuel such a move. We could expect a sideways trading pattern around the current levels for the last day of the week so we might need to remain cautious over the Cable’s outlook today until we get a better idea of what’s to come.

Focus of the day
Eurozone unemployment figures and the area’s inflation levels are the two most important reports for the day ahead and even though we don’t expect much of a reaction from the Euro it is important to note down these numbers. UK Mortgage Approvals from the UK and Personal Income and Spending from the US are also pending for release today but they’re consider tier-2 reports and their effect on the price action is expected to be minimal.

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