The greenback paused its recent descent and held steadily in range as investors shift their focus on today's vote on the US President Donald Trump's American Health Care Act in House. The fate of healthcare bill would be the first major legislation of the new Trump administration and drive market expectations over Trump's ability to push through the promised pro-growth economic policies.
The key US Dollar Index has given majority of its gains posted after the US Presidential election and major disappointment came from the not so hawkish Fed monetary policy outlook, signaling a gradual pace of rate-tightening cycle. Hence, today's vote could prove to be a game changer for the US Dollar's near-term trajectory.
Investors' on Thursday would also be focusing on the upcoming speeches from the Fed Chair Janet Yellen and Minneapolis Fed President Neel Kashkari – the sole dissenter against the Fed rate hike decision last week. A dovish tilt could lead to further depreciation of the buck.
GBP/USD
The GBP/USD pair on Wednesday failed to extend its up-move beyond the key 1.25 psychological mark and corrected to 1.2425 region amid nervousness ahead of the Scottish Parliament debate on second independence referendum. The vote, however, was suspended in wake of the Westminster terror attack. The terrorist attack in London had little direct impact on the market action, with the pair reversing all of its early losses and ending the day with marginal gains.
On Thursday, the pair traded with mild positive bias and continued with its attempts to decisively break through the 1.25 handle. With short-term technical indicator holding in neutral territory, coupled with consolidative price-action around an important juncture, today’s release of UK monthly retail sales could act as an important catalyst for the pair’s next leg of directional move.
In terms of technical levels, sustained strength above 1.25 mark, leading to a subsequent momentum above 1.2525 intermediate resistance, is likely to accelerate the up-move towards 1.2570 level (Feb. 24 high). Above 1.2570 resistance, the pair seems all set to surpass 1.2600 round figure mark and head towards testing 1.2630-35 resistance area ahead of 2017 daily closing highs resistance near 1.2655-60 region.
Conversely, reversal from current resistance level could drag the pair back towards an important confluence resistance break, now turned support, near 1.2410-15 region - comprising of 50% Fibonacci retracement level, descending channel resistance break-point ad 100-day SMA. A follow through selling pressure below the 1.2400 support area would turn the pair vulnerable to extend the corrective slide towards 1.2340-35 support area, marking 23.6% Fibonacci retracement level of 1.2706-1.2109 downslide.
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