FOREX NEWS: BEARS GAIN CONFIDENCE BUT BULLISH RETRACEMENTS ARE EXPECTED
Forex News: The bears continued yesterday the momentum which started a day before and successfully broke the support located at 1.3585. The economic data released throughout the day was in line with analystsí expectations but didnít have a huge impact on price action.
The sellers are in control of the pair at the moment with both 1.3585 and 1.3560 being broken. Now the support at 1.3500 is the next lower target but on a four hour chart the Relative Strength Index is dangerously close to the 30 level which indicates an oversold condition. We expect retracements north which can encounter resistance at the two levels mentioned earlier (broken support may turn into resistance) and once the retracement is complete, bearish price action can resume.Fundamental Outlook
The day ahead lacks important economic releases for both the Euro and the US Dollar so direction will be mainly influenced by the technical aspect of the market.GBP/USD
United Kingdomís Manufacturing output showed a figure which matched the forecast and the impact on the Pound wasnít tremendous. However, mostly due to technical reasons, our predicted target of 1.6750 was reached yesterday.Technical Outlook
The pair paused at 1.6750 support and we are now faced with another bounce-or-break scenario. The Relative Strength Index is not showing an extreme reading so it doesnít help a lot in predicting if we will see a break or a bounce; the next levels of interest are 1.6700 to the downside and 1.6820 to the upside but the Poundís direction will depend a lot on the unemployment data released today.Fundamental Outlook
AT 8:30 am GMT the Claimant Count Change will be announced by the UK Office for National Statistics. The indicator shows the change in the number of unemployed people who asked for social help during the previous month and usually higher numbers indicate that economic activity has decreased. Todayís forecast is -25.0K, almost unchanged from last monthís -25.1K and the Pound will be weakened if numbers above the forecast are shown.