FOREX NEWS: CONSUMER PRICE INDEXES STEAL THE HEADLINES ONCE AGAIN
Forex News: As expected, the pair had a calm and mostly sideways trading session yesterday. The bulls didnít manage to take price significantly higher but at least they prevented the bears form making further advances.
Although price retraced slightly yesterday, the move wasnít enough to clear the oversold condition of the Relative Strength Index, a fact which makes further drops more difficult. Adding to this, bullish divergence is also present (price made a lower low while the RSI only printed a double bottom) so from a strictly technical perspective, moves north are in order. If these moves occur, they must be seen as retracements in a short term downtrend, not necessarily reversals.Fundamental Outlook
Market participants eagerly await the release of the Euro Zone Consumer Price Index which is scheduled at 9:00 am GMT. This is Euro Zoneís main inflation gauge and the ECB is closely watching it before deciding if monetary stimulus measures will be adopted at their June meeting. The risk of deflation is present and a lower value of the CPI than the estimated 0.7% can weaken the Euro; the opposite applies for a higher value. United Statesí CPI will be announced today as well, but its importance is lower than the one of the European CPI; the release is scheduled at 12:30 pm GMT and the anticipated value is 0.3%.
The Philly Fed Manufacturing Index is perceived as a high impact indicator which shows the opinions of manufacturers from the Philadelphia district regarding economic and business conditions. The indicator is released at 2:00 pm GMT with an expected figure of 13.9, a decrease from the previous 16.6; higher values are considered bullish for the US Dollar.GBP/USD
The Bank of England Inflation Report was less hawkish than expected and no hints about a near-future rate hike were given. The market perceived this as a dovish attitude of the BoE and as a result the pair had another bearish trading session.Technical Outlook
The pair pierced through the support located at 1.6820 and even touched 1.6750. We expect bullish moves today even if the control belongs to the bears and we base this opinion on the fact that the current move is reaching an overextended phase and the Relative Strength Index is constantly touching the 30 level. Resistance sits at 1.6820 and if a touch of this level occurs, price is likely to bounce lower.Fundamental Outlook
The Pound has a calm day in terms of economic data releases so price action will be mostly affected by the technical aspect and by the US indicators mentioned above.This post has been edited by GDMFX: May 15 2014, 02:58 PM