The GBP/USD pair jumped to 1.43 levels in the European session and extended gains further to a high of 1.4445 in the US session on the back of a broad based USD weakness triggered by a weak US PMI manufacturing and personal spending data. The major takeaways from the US data released yesterday are – the savings rate in December rose to highest since Dec 2012 (as income rose, but spending dropped) and ISM manufacturing employment index dropped to 45.9 in Jan from 48.0 in Dec.
Eyes UK construction PMI
Cable’s corrective rally from the multi-year low of 1.4079 could receive another shot in the arm today if the construction PMI for January prints more than the estimated drop to 57.6 from 57.8. This is the least important PMI when compared to the other two – manufacturing and services. Nevertheless, a better-than-expected construction PMI would be welcome development. Again, the single most important component of the construction PMI (apart from the headline) is the employment sub-index. A rise in construction sector employment would be good news but may receive little immediate attention from the markets. Later in the day, Fed’s George’s comments would be watched out for any hints regarding the next rate hike.
Technicals – Next stop at 1.4476 after bullish daily close
Sterling’s rebound from the falling trend line support (marked by red circle) on Friday, followed by a bullish daily closing above 1.4413 (Friday’s high) has opened doors for a rise to 1.4476 (immediate resistance on the hourly chart).
A break higher would expose 1.4516 (23.6% of 1.5930-1.4079).
Fresh bids are seen coming-in so long as the pair stays above the rising trend line support on the hourly chart currently seen at 1.4340.
An hourly close below the rising trend line support would warrant caution as the pair may slip further to next support seen at 1.4249.
EUR/USD Analysis: Eyes confluence of Fibo and falling trendline resistance at 1.0940
The EUR/USD pair rose to an intraday high of 1.0919 on the back of a moderate risk aversion in equities and weak US data. The PMI numbers across Eurozone once again received little/no attention from the markets. This has been the case ever since the EUR became a funding currency (after ECB introduced (-ve deposit rates). Moreover, the funding currency is more responsive to action in the risk assets and only tracks critical data sets like – inflation numbers in EZ and US data.
The German unemployment change and the Eurozone unemployment rate due today could be ignored as well. A few pips move here and there cannot be ruled out, but a major trend change is unlikely following the German/EZ data release. Meanwhile, the economic calendar in the US is light as well. Hence, the common currency remains at the mercy of the equity market sentiment and broad based demand for the US dollars.
Technicals – Eyes 1.0940
Euro’s rising bottom formation on the 4-hour chart, coupled with a bullish break from the falling channel indicates the currency is likely to make a go at the confluence of the falling trend line resistance and 61.8% of Mar-Aug rally seen at 1.0940.
Only an hourly close above 1.0940 would open doors for a further rally to 1.10 levels
On the other hand, a failure take out 1.0940 could see the pair revisit the rising trend line (blue) support currently seen at 1.0820.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds steady above 1.0650, awaits US data and Fed verdict
EUR/USD is trading sideways above 1.0650 amid a softer risk tone and broad US Dollar strength on Wednesday. With European markets closed for Labor Day, the pair awaits the US employment data and the Fed policy announcements for the next directional move.
GBP/USD flatlines below 1.2500 ahead of US data, Fed
GBP/USD is off the lows but stays flatlined below 1.2500 early Wednesday. The US Dollar strength caps the pair's upside amid a cautious mood ahead of the top-tier US employment data and the all-important Fed policy announcements.
Gold treads water below $2,300, as Fed decision looms
Gold price is catching a breather below $2,300 on Wednesday, having hit a fresh four-week low at $2,281. Traders refrain from placing fresh directional bets on Gold price, anticipating the all-important US Federal Reserve interest rate decision due later in the day.
A new stage of Bitcoin's decline
Bitcoin's closing price on Tuesday became the lowest since late February, confirming the downward trend and falling under March and April support and the psychologically important round level.
ADP Employment Change Preview: US private sector expected to add 179K new jobs in April
The ADP report is expected to show the US private sector added 179K jobs in April. A tight labour market and sticky inflation support the Fed’s tight stance. The US Dollar seems to have entered a consolidative phase.