Price action lacks momentum as the majors are looking for direction

General market theme
Limited price action in the major money markets yesterday as traders remained undecided on what to do and preferred to sit on the sidelines. In recent weeks we’ve seen periods of extended volatility and overstretched rallies followed by times of limited price action and consolidation within a small sideways formation. With the Dollar’s outlook being in doubt since the beginning of the year and now the British Pound and the Euro under threat by the potential exit of Britain from the EU the major money markets are struggling for clarity and direction.

Price action highlights
The Euro spent the day battling to break below the 1.1000 support level once again yesterday but it seems that this time it didn’t work. The European currency edged lower momentarily but it is clear that this important support area is defended heavily from investors that are betting against the US Dollar at this time. As a result the Euro popped higher overnight and this morning is trading around the 1.1050 level but whether it has enough support to look to the upside remains to be seen.

The Cable traded in exactly the same manner over the last 24 hours having troubles breaking below the 1.3900 level. The British currency remained under pressure ahead of the upcoming Brexit referendum but the support level seemed hard to break at this time and the Pound edged higher overnight making it to the 1.4000 level. This is a key resistance area for the short term and if the Pound is mount a recovery it needs to overcome it even though the bias remains bearish.

Focus of the day
Today the focus will be on the release of a couple of tier-1 reports from Europe and the US, the German Consumer Price Index is closely monitored by traders to gauge the inflation levels in Europe’s strongest economy even though we don’t expect too much of a reaction from the Euro to the report this morning. Later in the day the US GDP and Personal Consumption levels might provide some fresh data from the US domestic market and help clear Dollar’s outlook.