Further uncertainty compared with frequent changes in direction remains the theme in the currency markets for this week and we could see even more price action like that as long as we have no definitive developments to dictate a certain direction. At the beginning of the week we made word for an end to the previous sell-off rally of the Dollar but we also made it very clear that a reversal to the other way was not to be immediately expected.
The recent price action in the major instruments we monitor in our report prove us right as yesterday both the Euro and the Cable were able to gain back some of the losses they had earlier this week. With no significant events or reports scheduled for release this week we should expect even more uncertainty in the price direction of these currencies as traders are taking advantage of this slow week to reposition themselves.
Taking a look at the technical outlook of the two major currencies and starting with the Euro we notice an attempt to claw back some its recent losses. The initial decline below the 1.0700 level yesterday didn’t last long and the Euro bounced back higher after hitting a 1.0660 intra-day low. With the currency trading lazily between 1.0700 and 1.0800 at this time we expect limited price action unless we have a surprise development.
Most headlines continue to discuss the doubts that Greece’s debt negotiations bring to the table regarding the area’s stability and as long as we see no meaningful progress we should expect more directionless trading.
The Cable traded in a similar manner yesterday and after testing the 200-period moving average at the 1.4850 area it found support that drove it back around the 1.5000 resistance. Unlike the Euro though we should expect further price action from the UK currency over the next 24 hours as the release of BoE’s minutes from their last meeting on monetary policy should take its toll on the currency.
Fresh pressures from bearish remarks in the minutes should drive the Cable towards the 1.4800 support floor while it will be interesting to see whether any bullish comments would have what it takes to send the Cable above the 1.5000 barrier and towards its previous 1.5050 highs.
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