FOREX NEWS: HIGH PRICES BECOME HARD TO SUSTAIN
Forex News: Finally the pair started to move stronger yesterday as the Spanish Unemployment Change showed much better figures than anticipated. The surprising value of -111.6K (estimated -49.1K) turned this indicator, which is usually overlooked by market participants, into a major market mover.
Yesterday’s impulse is likely to be continued during the days to come but the condition of the Relative Strength Index which is trading above the level of 70 must be taken into consideration. The overbought state of the pair, as indicated by the RSI favors retracements, but as we know, the market can remain overbought for a long time before price actually starts to fall. If retracements do occur, 1.3900 will act as support while resistance is located at 1.3965, followed by the psychological level of 1.4000.Fundamental Outlook
The German Factory Orders will be announced today at 6:00 am GMT, showing the monthly change in the value or orders placed with manufacturers. Although the indicator usually has a medium impact on the market, better numbers than the anticipated 0.3% can strengthen the Euro. A more important event is scheduled at 2:00 pm GMT: the testimony of Fed Chair Janet Yellen, in Washington DC. She will testify before the Joint Economic Committee of Congress and will answer questions which are not known in advance, a fact which will most likely generate strong moves, depending on her attitude and answers.GBP/USD
The bulls had a tremendous day yesterday as they managed to take price about 130 pips higher on the back of a better than anticipated value of the UK Services PMI.Technical Outlook
Yesterday’s huge climb renewed the uptrend and made 1.7040 the next target for the pair (visible on a Monthly chart). However, the current price is very high and this makes it hard to sustain; the Relative Strength Index is overbought on hourly, four-hour and daily charts and this enhances the probability of bearish moves. The first potential support is located at 1.6920.Fundamental Outlook
Today the United Kingdom doesn’t release any major economic indicators, so traders will focus more on the technical aspect and on Janet Yellen’s testimony.