Price action over the past 24 hours has been limited even though we expected more from the major money markets now that the summer holidays are behind us. With traders coming back and more important events drawing closer the interest in the major instruments should be picking up quite quickly as the week progresses. The most important event of the week is undoubtedly the Non-Farm Payrolls report on Friday however tomorrow’s ECB decision and press conference will also increase volatility in the markets.
Yesterday’s price action was rather limited though with no significant changes in the outlook of the major currency pairs, even though we’ve had fresh news from Europe and the US. Several second-tier reports from different European countries and the Union as well ticked higher while the US Manufacturing report printed lower but there was a clear lack of conviction from traders that kept the Euro capped below the 1.1300 barrier.
However the outlook remains bullish at this time and from a technical perspective we should expect more short-term gains from the Single currency as soon as the 1.1300 resistance is broken. Today the focus will remain on Europe ahead of tomorrow’s ECB meeting as traders will look to position themselves ahead of Mario Draghi’s comments. The general sentiment is positive and with doubts on whether the Fed will hike rates this month the Euro should find enough support to climb higher.
The Cable remained bearish yesterday and has reached the 1.5300 level even though Mortgage Approvals ticked higher. It was the miss on the Manufacturing PMI report that kept the UK currency under pressure as the report missed its mark by a slight margin. Today and tomorrow the release of the Construction and Services PMI levels respectively are predicted to print in a bullish manner and that could allow for a correction to the upside.
With the US Dollar under risk from a possible delay in Fed’s schedule to raise rates in the coming months the Cable could see a swift reversal in the sharp decline it has suffered in the previous couple of weeks. The first level of resistance lies in the 1.5400 area and a successful breach of this ceiling should clear the path for the 1.5500 and 1.5600 areas in quick succession.
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