The GBP/USD pair remained stuck within its recent trading range and reversed some of Monday's recovery gains as investor look forward to the Bank of England Governor and several MPC members' testimony on the inflation and economic outlooks before Parliament's Treasury Committee.
On Monday, the pair rebounded from a short-term ascending trend-line support near 1.2400 handle and rose to 1.2480 region amid holiday-thinned trading activity in wake of the US Presidents Day holiday. The up-move, however, lacked conviction in absence of any fresh trading cues in-terms of market moving economic releases.
Despite of Monday’s recovery bounce, the pair remained within a short-term symmetrical triangular formation and hence, a subsequent retracement could get extended towards the lower ascending trend-line support near 1.2400 handle. A convincing break below this immediate support would confirm a near-term break down and turn the pair vulnerable to break through 1.2365 intermediate support, and 1.2300 handle, and head towards testing its next major support near mid-1.2200s.
On the up-side, the symmetrical triangle resistance near 1.2500 psychological mark might continue to act as immediate strong hurdle, which if cleared decisively should trigger a short-covering rally immediately towards 1.2565-70 intermediate resistance, en-route 1.2600 round figure mark. A follow through buying interest above 1.2600 handle would negate any near-term bearish bias and pave way for further near-term recovery for the major.
Meanwhile, the EUR/USD pair came under some renewed selling pressure and has now drifted back below 1.0600 handle led by political instability surrounding the upcoming French election. The latest poll indicated continuous gains for Marine Le Pen, which continued fueling concerns that his victory could lead to France exiting the EU.
Today’s economic docket features the release of flash Euro-zone PMI numbers and would be looked upon for some immediate respite during European trading session.
The pair is sustaining its weakness below 1.0600 handle and hence, a subsequent selling pressure below 1.0575-70 horizontal zone would turn the pair vulnerable to continue drifting lower towards sub-1.0500 level, marking a short-term descending trend-line support, with some intermediate support near 1.0520 region (mid-Feb. low).
Conversely, rebound from current support level and a subsequent strength back above 1.0600 handle, leading to a subsequent momentum above 1.0630-35 region (yesterday’s low), now seems to assist the pair to surpass 1.0675-85 horizontal resistance and aim towards 1.0750-55 resistance area before eventually climbing back towards 1.0800 round figure mark.
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