The greenback traded mixed against its major counterparts as market participants now look forwards to the US President Donald Trump's first address to Congress on Tuesday. Of late, lack of details over the new administration’s expansive fiscal policies has been weighing on the US Dollar and hence, repositioning trade would be a key theme in the FX markets at the start of a new trading week.
In the meantime, the US macro releases – monthly durable goods orders, pending home sales, alongside Dallas Fed President Robert Kaplan's speech would be looked upon for some short-term trading opportunities ahead of Trump's address this week.
GBP/USD
Meanwhile, the British Pound witnessed a notable weakness during early Asian session on Monday in wake of news that UK Prime Minister Theresa May's proposal for another Scottish independence referendum. The GBP/USD pair dipped below 1.2400 handle but managed to bounce off recent trading range support and is currently trading around 1.2425-30 band.
The pair has repeatedly failed to build on to its move above the 1.2500 psychological mark, albeit the downslide has been limited at 1.2390-80 horizontal support. Hence, it would be prudent to wait for a decisive break through this recent trading range before confirming the pair’s next leg of directional move. Also on daily chart, technical indicators have turned neutral and are further reinforcing near-term range-bound price action within a broader trading range.
In terms of technical levels, decisive weakness below 1.2390-80 immediate support is likely to accelerate the slide towards 1.2350-45 region before the pair eventually drops below 1.2300 handle and head towards testing 1.2260-55 horizontal support.
On the flip side, recovery back above 1.2470 level would reaffirm near-term trading range and lift the pair back above 1.2500 handle towards the range resistance near 1.2555-60 area. A convincing move above this important hurdle should pave way for continuation of the pair’s near-term recovery move initially towards 1.2600 handle and eventually towards 1.2650-55 resistance area.
EUR/USD
The pair on Friday failed to sustain its move back above 1.0600 handle and reversed all of its gains recorded in the previous session, pointing towards investors’ reluctance to hold / initiate fresh long-Euro positions. The pair did attempt a move to break through a short-term ascending trend-resistance but failed to surpass an immediate resistance near 1.0620 level, marking 38.2% Fibonacci retracement level of 1.0829-1.0494 downslide.
On Monday, however, the pair has managed to bounce of mid-1.0500s and is now attempting a move past 23.6% Fibonacci retracement level immediate resistance near 1.0575 region. Momentum above the said resistance could get extended towards 1.0600 strong barrier above which a fresh leg of up-move should now lift the pair beyond 1.0620 resistance towards 50% Fibonacci retracement level resistance near 1.0660 level, en-route 1.0700 handle marking 61.8% Fibonacci retracement level.
Alternatively, weakness below session lows support near 1.0550 level, leading to a subsequent break below 1.0530 horizontal support, might now turn the pair vulnerable to break back below 1.0500 psychological mark and head towards retesting 1.0400 handle with some intermediate support near 1.0455-50 region.
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