Trading volume was unusually weak on Monday because of a bank holiday in the UK, but the US Dollar (USD) continued to trend lower against most of its major counterparts, including Euro and the British Pound. The GBP/USD pair rose to 1.4696, nearly reclaiming 1.4700 level, after data from the US showed manufacturing sector barely grew in April. The Institute of Supply Management's manufacturing index (PMI) fell more-than-expected to 50.8 in April from 51.8 in March, against economists forecast to fall to 51.4.
The EUR/USD pair also extended its gains and broke above 1.15 psychological mark for the first time since August 2015. Earlier during the day, the shared currency found support after the final PMI for the Euro-zone's manufacturing sector in April was revised up to 51.7 from 51.5. Monday's up-move marked EUR/USD's rise for sixth consecutive day, its longest run of gains since September 2015.
With the Euro-zone economic calendar virtually empty on Tuesday, traders would look forward to the manufacturing PMI release from the UK for further trading cues.
Technical Outlook
GBP/USD
Although the pair retraced after nearly hitting 1.4700 mark, it continued holding its immediate support near 1.4650 level. Moreover, weakness below 1.4650 should continue finding support near 1.4625 confluence support, comprising of a short-term ascending trend-channel formation on H4 and 20-SMA.
Only a convincing break below 1.4625 support confluence would negate bullish bias and trigger a short-term corrective move. Below 1.4625, the pair could immediately drop to 1.4580 intermediate support and the fall could further get extended towards 1.4525-20 support region.
On the upside, 1.4700 handle remains immediate psychological hurdle, which if conquered should continue boosting the pair in the near-term. Strength above 1.4700 handle now seems to open room for extension of the pair’s near-term upward trajectory, towards the ascending trend-channel resistance, currently near 1.4850-60 region, with 1.4800 round figure mark acting as intermediate resistance.
EUR/USD
The pair’s momentum seems strong enough and hence could witness a follow through buying interest, which would continue boosting the pair in the near-term. From current levels, Aug. 26, 2015 high level of 1.1559-60 seems to provide some intermediate resistance. This is closely followed by resistance near 1.1600-1.1615 round figure mark. A clear break through these immediate resistance levels would now open room for additional momentum towards 1.1680-1.1700 mark, representing a short-term ascending trend-channel resistance.
On the downside, Oct. 2015 highs resistance near 1.1500-1.1490 area now seems to act as immediate support. Weakness below 1.1500 is likely to be limited by 1.1460-55 strong resistance turned support area. Only a decisive break below this strong support might negate near-term bullish bias and drag the pair back towards 1.1335-30 support area.
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