Alpesh Patel
InvestingBetter.com
General market theme
Price action was limited at the start of the week in the major instruments we monitor in our daily report and even though we’re going through a week with a number of important news and reports traders preferred to remain cautious over the past 24 hours. Nevertheless starting we’re bound to see more volatility as tier-1 economic reports and developments are coming our way and we could be seeing a correction in the main trends we’ve been looking at over the past couple of weeks. The focus today will be on the Pound with the release of the Services PMI figures and the US Dollar as the Non-Manufacturing ISM report is also scheduled for release.
Price action highlights
The Euro traded sideways over the past 24 hours trading just shy of the 1.1400 level and it is clear that the momentum behind the previous uptrend has diminished. This development could hint towards a correction as traders realize that the bearish views regarding the Dollar’s outlook might be overstated and if profit-taking kicks in we could see the Single currency testing the 1.1300 support at some point. Today’s ISM report is expected to print in favor of the Dollar so this could be one of the reasons to trigger a correction in the overbought Euro.
The Cable was on the rise yesterday after a better than expected Construction PMI reading that sent the rate above the 1.4300 resistance level. Later in the day the Pound corrected lower but the bias might be on the upside today as we expect the release of the Services PMI report and expectations are set for a bullish reading. The sentiment in the bias remains bearish ahead of a potential Brexit but on a short-term horizon the Pound could look towards the 1.4400 level if the PMI report prints as strong as expected.
Focus of the day
As we mentioned in our opening remarks today the focus will mainly be on the Pound early in the morning as the release of the Services PMI report could drive volatility higher and later in the day traders will want to see how the ISM reading from the US prints as the Dollar could be in for a correction to the upside. The Eurozone Retail Sales will be released between the two aforementioned reports but we believe that traders will mostly be focused on the US ISM reading later in the day regarding Euro’s price action.
Economic Calendar
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