GBP/USD eyeing to test ascending trend-channel support, focus shifts to US GDP

At the start of a new week, the greenback initially pulled back from multi-year highs but reversed early weakness after the Organization for Economic Cooperation and Development (OECD) upgraded US economic growth projection for 2017 to 2.3% from previous estimate of 1.9%, while for 2018, the projected economic growth was revised to 3.0% from 2.2%. The GBP/USD major failed to build on to its momentum move back above 50-day SMA / 1.2500 psychological mark and turned sharply lower, while the EUR/USD pair failed to sustain its recovery back above 1.0600 handle.

On Tuesday, both the majors traded within a narrow trading band, with slight negative bias, as investors turned cautious ahead of a busy week for potentially market-moving economic data points. Markets are already looking beyond December FOMC meeting and hence, this week's key US macro releases will catch additional focus in order to determine the timing of next Fed rate-hike action in 2017.

Today's economic docket features the release of CPI reading from Germany and Spain, and from the US, investors will confront the release of prelim US GDP growth and the Conference Board's Consumer Confidence index. The third quarter US GDP growth is expected to be revised higher to 3.0% (annualized rate) from originally estimated 2.9%, while CB Consumer Confidence index is also anticipated to rise to 100.0 in November, up from October's 98.6.

Technical outlook

GBP/USD

Yet another rejection from 50-day SMA and a subsequent drop to 1.2400 handle has now turned the pair vulnerable to head towards testing an important confluence support near 1.2330-25 region, comprising of a short-term ascending trend-channel and 23.6% Fibonacci retracement level of 1.3438-1.1980 downfall. A decisive break below this immediate important support might now negate possibilities of any near-term recovery and continue dragging the pair in the near-term. On a convincing break below 1.2330-25 support area, the pair is likely to immediately dart towards 1.2150 intermediate support before eventually dropping to flash-crash swing lows support near 1.2000 psychological mark.

Meanwhile on the upside, 1.2470 region (50-day SMA) now becomes immediate resistance above which the pair is likely to make a fresh attempt to conquer 1.2500 mark and head towards 38.2% Fibonacci retracement level resistance near 1.2535-40 region. A follow through buying interest above 1.2535-40 resistance has the potential to boost the pair further towards its next major hurdle near 1.2700 handle (50% Fibonacci retracement level) with Nov. month high near 1.2675 level acting as intermediate resistance.

EUR/USD

With short-term indicators moving out of near-term oversold conditions, the pair’s inability to register any meaningful recovery clearly points to near-term consolidation phase before the pair resumes its near-term depreciating move. From current levels, 1.0565 area now seems to protect immediate downside, which if broken is likely to accelerate the slide towards recent monthly-month lows support near 1.0520 region. The downward momentum could further get extended towards March 2015 lows support near 1.0470-60 region.

On the upside, any recovery attempts might continue to confront resistance near 1.0700 region, nearing 23.6% Fibonacci retracement level of 1.1300-1.0518 recent down-leg, which if cleared decisively might trigger a short-covering rally towards 1.0740-45 intermediate resistance en-route 100-SMA (4-hourly) resistance near 1.0785-90 region.