Trading volume was unusually weak on Monday because of a bank holiday in the UK, but the US Dollar (USD) continued to trend lower against most of its major counterparts, including Euro and the British Pound. The GBP/USD pair rose to 1.4696, nearly reclaiming 1.4700 level, after data from the US showed manufacturing sector barely grew in April. The Institute of Supply Management's manufacturing index (PMI) fell more-than-expected to 50.8 in April from 51.8 in March, against economists forecast to fall to 51.4.
The EUR/USD pair also extended its gains and broke above 1.15 psychological mark for the first time since August 2015. Earlier during the day, the shared currency found support after the final PMI for the Euro-zone's manufacturing sector in April was revised up to 51.7 from 51.5. Monday's up-move marked EUR/USD's rise for sixth consecutive day, its longest run of gains since September 2015.
With the Euro-zone economic calendar virtually empty on Tuesday, traders would look forward to the manufacturing PMI release from the UK for further trading cues.
Technical Outlook
GBP/USD
Although the pair retraced after nearly hitting 1.4700 mark, it continued holding its immediate support near 1.4650 level. Moreover, weakness below 1.4650 should continue finding support near 1.4625 confluence support, comprising of a short-term ascending trend-channel formation on H4 and 20-SMA.
Only a convincing break below 1.4625 support confluence would negate bullish bias and trigger a short-term corrective move. Below 1.4625, the pair could immediately drop to 1.4580 intermediate support and the fall could further get extended towards 1.4525-20 support region.
On the upside, 1.4700 handle remains immediate psychological hurdle, which if conquered should continue boosting the pair in the near-term. Strength above 1.4700 handle now seems to open room for extension of the pair’s near-term upward trajectory, towards the ascending trend-channel resistance, currently near 1.4850-60 region, with 1.4800 round figure mark acting as intermediate resistance.
EUR/USD
The pair’s momentum seems strong enough and hence could witness a follow through buying interest, which would continue boosting the pair in the near-term. From current levels, Aug. 26, 2015 high level of 1.1559-60 seems to provide some intermediate resistance. This is closely followed by resistance near 1.1600-1.1615 round figure mark. A clear break through these immediate resistance levels would now open room for additional momentum towards 1.1680-1.1700 mark, representing a short-term ascending trend-channel resistance.
On the downside, Oct. 2015 highs resistance near 1.1500-1.1490 area now seems to act as immediate support. Weakness below 1.1500 is likely to be limited by 1.1460-55 strong resistance turned support area. Only a decisive break below this strong support might negate near-term bullish bias and drag the pair back towards 1.1335-30 support area.
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
USD/JPY briefly recaptures 160.00, then pulls back sharply
Having briefly recaptured 160.00, USD/JPY pulls back sharply toward 159.00 on potential Japanese FX intervention risks. The Yen tumbles amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
AUD/USD extends gains above 0.6550 on risk flows, hawkish RBA expectations
AUD/USD extends gains above 0.6550 in the Asian session on Monday. The Aussie pair is underpinned by increased bets of an RBA rate hike at its May policy meeting after the previous week's hot Australian CPI data. Risk flows also power the pair's upside.
Gold stays weak below $2,350 amid risk-on mood, firmer USD
Gold price trades on a softer note below $2,350 early Monday. The recent US economic data showed that US inflationary pressures stayed firm, supporting the US Dollar at the expense of Gold price. The upbeat mood also adds to the weight on the bright metal.
Ethereum fees drops to lowest level since October, ETH sustains above $3,200
Ethereum’s high transaction fees has been a sticky issue for the blockchain in the past. This led to Layer 2 chains and scaling solutions developing alternatives for users looking to transact at a lower cost.
Week ahead: Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.