FOREX NEWS: A REVERSAL IN THE MAKING?
Forex News: The bears took control of the pair yesterday as ECB President Mario Draghi offered clear hints about an Interest Rate cut in June if the risk of deflation still persists. His comments took the pair almost 150 pips lower after a previous climb which nearly touched the psychological resistance at 1.4000.
Without a doubt, Mario Draghi’s stance favors the bears for the medium term outlook. Today we expect a continuation of yesterday’s move and we are biased towards a touch of 1.3830. The Relative Strength Index on a four hour chart doesn’t indicate an oversold condition so price can move lower before a retracement higher occurs. To the upside, the first level of interest is 1.3900.Fundamental Outlook
The German Trade Balance (difference in value between imports and exports) will be released today at 6:00 am GMT and it’s expected to increase from 15.7B to 16.9B. Figures that surpass estimates are considered bullish for the Euro, but the indicator is not a high impact one and its release may go unnoticed by the market.GBP/USD
The Bank of England did not modify the Interest Rate, as anticipated and the pair traded mostly sideways, without clear direction.Technical Outlook
The pair moved yesterday in a small range and neither bulls nor bears made clear statements of power but we maintain our belief that 1.6920 will be touched before bullish moves can occur. Once that happens, a bounce-or-break scenario will be in play: a bounce will indicate trend resumption and another encounter with the top created at 1.6996, while a break will make 1.6880 the first lower target.Fundamental Outlook
United Kingdom’s Manufacturing Production numbers are released today at 8:30 am GMT. Manufacturing is an important part of the British economy and higher values than the estimated 0.3% (previous was 1.0%) can push the Pound higher. Later in the day, at 2:00 pm GMT, an estimate of the UK Gross Domestic Product will be announced. The current value is 0.9% and any higher number can push the pair north.