FOREX NEWS: LABOR DAY GENERATES A DAY WITH LOW VOLUME
Forex News: Although the European CPI didnít meet expectations of 0.8%, it showed that inflation started to pick up and posted a reading of 0.7%, an increase from the previous 0.5%. This fact strengthened the Euro and the pair climbed strongly. The Fed decided to further cut bond purchases by another $10 billion a fact which was anticipated by market participants and didnít create a lot of volatility.
The support at 1.3790 was tested yesterday and it rejected higher the initial fall seen at the time of the CPI release. The US Dollar shows signs of weakness so we might see a touch of 1.3900 resistance sooner than anticipated. For the moment the first support sits at 1.3830 and the latest momentum belongs to the bulls so moves north are likely to happen, at least until the Relative Strength Index becomes overbought.Fundamental Outlook
Most European banks will be closed today in celebration of Labor Day and this may translate into irregular movement and low volume. Fed Chair Janet Yellen will speak at 12:30 pm GMT at a summit in Washington DC and this will most likely affect the pairís movement, especially if she will offer hints about future monetary policy. The US Dollar will also be affected today by the release of the Manufacturing PMI which is a survey of about 400 purchasing managers, focused on their opinions regarding business conditions in the manufacturing sector. The release is scheduled at 2:00 pm GMT and an increase is expected, from the previous 53.7 to 54.3, a fact which would strengthen the greenback.GBP/USD
Yesterday the US Gross Domestic Product posted a much worse than anticipated value which allowed the Pound to take the pair into the resistance located at 1.6880.Technical Outlook
The bulls scored another major victory by taking price into the resistance at 1.6880, a quote that was last seen in November 2009. Such a high price is hard to sustain and we will most likely see retracements lower but keep in mind that bulls control the pair and further advances are not out of the question. The next resistance is located at 1.7040 while support sits at 1.6820.Fundamental Outlook
At 8:30 am GMT the British Manufacturing PMI comes out, with an anticipated value of 55.4, an almost insignificant increase from the previous 55.3. The survey is based on the opinions of about 600 purchasing managers and its effect on the Pound can be a hefty one if a higher than anticipated figure will be posted. As always, the pairís movement will be affected by the US events as well.