The GBP/USD pair fell to a low of 1.5471 before recovering to trade above 1.55 and subsequently rising to 1.5550 levels after the BOE minutes as well as the Fed minutes largely turned out to be non events for the markets. Fed minutes failed to provide any clear indication regarding the timing of interest rate hikes. Policymakers noted the economy may not be strong enough for a rate hike in June, however, markets anyways were not expecting a rate hike in June. Consequently, nothing significant happened in the markets. GBP/USD closed the previous session at 1.5540.
The investors now await the UK retail sales (exp 3.7% yoy, prev 5.0%), (exp 0.4% mom, prev -0.5%). A better-than-expected data could see a renewed buying pressure in the British Pound. The pair may test its 5-DMA at 1.56 in this case. However, a weaker-than-expected print could weigh heavily over the pair, sending it lower to 1.5450-1.54 levels. At the moment, the GBP bears appear more strong on account of a negative inflation print and slightly less hawkish BOE inflation report released last week. Consequently, the downside move in case of a weak data is likely to be more sharp.
At the moment, the pair is trading at 1.5550 (Feb. 26 high). The pair appears stuck between key fib levels – 1.5519 (23.6% Fib of 1.4564-1.5813) and 1.5568 (38.2% Fib of 1.7190-1.4564). A break above 1.5568 could see the pair test its 5-DMA located at 1.56. However, given the bearish GBP fundamentals, fresh offers could be expected at or above 1.56. On the other hand, a break below 1.5518 could push the pair lower to 1.5445 and 1.5416 (200-DMA).
EUR/USD Analysis: Loss of downside momentum?
The single currency ran into offers 1.1154 in Asian morning on Wednesday and then tumbled to 1.1062 in European morning, however, short-covering ahead of Fed minutes lifted price to 1.1145. Immediately after the release of the Fed minutes, EUR fell to 1.1070 and then rebounded to 1.1142 before finishing the day lower at 1.1100. The Fed minutes largely turned out to be a non-event for the markets, with the message being the Fed would remain data dependent. Overall, no significant reactions were seen in the markets as the rate hike expectations remained largely unchanged.
As for today, the preliminary PMI manufacturing and services activity readings for April across the Eurozone would influence the pair along with the Greece issue. The PMI indices are expected to show the overall private sector activity remained in the positive territory (above 50), with no significant deterioration or improvement month-on-month.
The pair ran into fresh bids in the Asian session today at 1.11 to trade at 1.1122 levels. After three consecutive days of decline, the loss of momentum could help the pair rise above its hourly 50-MA at 1.1138 and make a move upwards to 1.1170-1175. On the other hand, a repeated failure to take out 1.1138 could trigger fresh selling pressure towards 1.1082 (38.2% R of 1.0461-1.1464) and 1.1047 (100-DMA). A daily close above 1.1229 (23.6% R) could indicate a short-term bottom is made at 1.1060, while a close below 1.0962 (50% R of 1.0461-1.1464) could result in extension of a larger downtrend.
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