Bank of England confidence sends the Pound higher, the Dollar still weak

General market theme
Second day in a row that the markets remain focused on the US Dollar on the back of the Fed decision and press conference earlier this week and the buck was once again under pressure against the rest of the majors. Add to that sentiment better than expected Eurozone data and a bullish tone from the BoE and you will understand why the Euro and the Cable continued on their runs upwards. However what is important to note is that both major currency pairs have reached key resistance levels and it will be crucial to see how they will tackle these levels as we move into next week.

Price action highlights
The Euro extended its rally above the 1.1200 area where we left it yesterday morning and the better than expected data from the Euro area and the bearish bias of the Dollar allowed the currency to reach the  1.1300 level. However what we’re seeing at this time is that the momentum that has driven the Single currency to this area is diminishing, maybe not enough for a correction lower as this would hinge on some kind of trigger but at least the Euro seems to have established a resistance around the 1.1300 level. How it will react from that will decide whether we should expect further gains next week or a retest of the 1.1200 area is next.

The Cable continued to the upside yesterday as well and the recovery from the 1.4100 lows is now spanning more than 400 pips. Dollar’s weakness on the back of the Fed comments and unexpected confidence from the BoE on the domestic economy allowed this extension to the 1.4500 area. The central bank acknowledged the risks of a potential Brexit but spent a lot of time praising the improvements in the domestic market hinting towards a more bullish bias. The support now lies at the 1.4400 level and if the Pound remains above it then we could see more gains next week.

Focus of the day
After an event-heavy week our economic calendar today is almost empty of anything important other than the release of the University of Michigan Confidence report early in the afternoon. The report is expected to print in a positive manner and it might prompt some traders to take profits off the table ahead of the weekend and allow the Dollar to recover slightly. However we wouldn’t put too much into this as the bias for the US currency is bearish right now and any correction shouldn’t be trusted at this point.