Alpesh Patel
InvestingBetter.com
General market theme
The Dollar remained in control during the first 24 hours of trading this week extending its gains on the back of the strong Retail Sales report last Friday. Yesterday there was a lack of any fresh news or developments thus trading continued on the same theme we left it at the end of the week. However today the focus turns to Europe with the release of the UK inflation levels in the form of the Consumer Price Index report and the business confidence ZEW Survey also this morning. Both reports are expected to print in a bearish manner so we could be in for more gains for the Dollar today against its European counterparties.
Price action highlights
As the Dollar continued to gain yesterday the Euro came under more pressure dropping below the 1.1200 level. The Single European currency has lost more than 200 pips since last week on the back of the strong correction in the Dollar and this morning its outlook hangs in the balance. The release of the ZEW Survey is what will dictate its price action today and analysts expect the business confidence report to print at lower levels than last month, such a development should push the Euro to its monthly lows below the 1.1100 support area.
The Pound was also in the red yesterday and the decline has led the currency below the 1.4500 area with the UK currency testing the 1.4400 support this morning. As we mentioned above the release of the inflation data today will play a pivotal role in how the Cable trades today as over the past days the currency has been trading sideways. To the downside the 1.4350 lows is the first support while a reaction higher should meet the resistance of the 1.4550 highs of last week.
Focus of the day
Heightened volatility is expected today with the release of two important reports from the European region as we discusses above. Price action in the Euro and the Cable is guaranteed this morning while there’s a lack of any important US-related news for the next 24 hours. Thus traders will focus their attention on the way the news print this morning and we need to be prepared and with clear scenarios in front of us.
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