By Fast Brokers – The Cable is crashing with the EUR/USD after the BoE issued a more Dovish monetary statement than anticipated. Although the BoE halted its QE program as expected, Mervin King stated that the possibility of more QE is on the table such economic conditions deteriorate. Hence, despite some positive economic data lately the BoE is opting to take a wait and see approach to determine whether the global economic recovery has hit a bump in the road or if we are beginning a more protracted pullback. Furthermore, it seems all central banks want to gauge how tighter liquidity measures in China will impact global growth. The wait-and-see policies issued from central banks have heightened investor uncertainty, leading investors to the Dollar as a safe haven. Today’s weaker than expected Halifax HPI data didn’t help matters either, adding further downward pressure on the Cable. Meanwhile, investors are also reacting to a pop in U.S. Unemployment Claims and Productivity. The negative U.S. data set has ignited upward momentum in the Dollar as investors question the sustainability of the global economic recovery. The UK will release PPI tomorrow. Even though a strong PPI release could help buoy the Pound, even Mervin King disregarded this month’s pop in CPI as an abnormal affair. Attention will focus in on the U.S. during the afternoon with the headline Unemployment Rate and Non-Farm Employment Change data being released. Therefore, volatility could remain at a heightened state as the trading week comes to a close.
Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday and 2/3 highs. The Cable has dropped below December lows, a negative development technically. The currency pair now has September and October 2009 lows serving as technical cushions. Furthermore, we’ve created some new uptrend lines (off screen). Investors should take note our new uptrend lines run through the 1.55 area, implying the Cable could have some more room to go to the downside.
Present Price: 1.5781
Resistances: 1.5798, 1.5818, 1.5829, 1.5848, 1.5861, 1.5876
Supports: 1.5775, 1.5758, 1.5717, 1.5690, 1.5675, 1.5639, 1.5601
Psychological: 1.55, September and October 2009 lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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