The GBP/USD fell in the European session on Monday to 1.5125 levels, before bouncing back to 1.5185 (23.6% of Jul 2014-Apr 2015 plunge) on a batch of weaker-than-expected US data only to fall back to a fresh session low of 1.5109 levels post the opening bell in the US.
Eyes Carney ahead of US GDP
Bank of England Governor (BOE) Mark Carney is scheduled to testify to UK legislators on the Treasury Committee about the central bank's latest Inflation report. The QIR revised the GDP and inflation forecasts lower, while Carny was reluctant to reiterate that the rates could rise at the turn of this year. Markets would watch out Carney’s comments, which are likely to be in line with the QIR. A major hawkish surprise would be Carney reiterating the rates could rise at the turn of the year. Later today, the second estimate of the US GDP is due. The effect on GBP/USD, EUR/USD and Gold is discussed here (Macro Scan)
Technicals – Support at 1.5087
At 1.5136, sterling could make an attempt at 1.5154 (hourly chart resistance), however, the lower highs formation on the daily could cap gains around the same and lead to a fresh drop to 1.5087 (61.8% of Apr-Jun rally). Further losses to 1.5025 -1.50 could be seen in case the US GDP prints way above estimates. On the other hand, a failure to break below 1.5087 would open doors for a technical correction to 1.52 levels.
EUR/USD Analysis: Dragon fly Doji on daily chart, trend reversal ahead?
The EUR/USD pair fell below 1.06 levels for the first time in 7 months. The currency pair paid little/no attention towards the better-than-expected German and Eurozone private sector activity data because the market feels the upbeat figures will not hold the ECB from announcing more stimulus next week. Consequently, the pair also refused to rise on a weaker US data.
On similar lines, the German GDP and the IFO readings may not have any impact on the pair unless the numbers are horribly weak. A weaker-than-expected German GDP could trigger risk aversion in equities and actually lend support to the EUR.
Technicals- Dragonfly Doji
Euro formed a dragonfly doji on the daily chart indicating the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point. Still, it is too early to say the trend has reversed, especially since the ECB meeting is still a week away. Nevertheless, the dragonfly doji may lead to a technical correction today to 1.0674 (Nov 10 low)-1.07 levels. The higher lows on RSI is also pointing towards a pending technical correction. On the other hand, a break below 1.0592 would open doors for a sell-off to 1.0520 (Apr 13 low).
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