By Fast Brokers – The Cable is drifting lower today as the currency pair continues to cool from this week’s impressive topside run. More uncertainty in the EU has had a negative psychological impact on the risk trade as the whole with the Aussie and gold also being dragged lower. However, the Pound is continuing to exert a relative strength, highlighted by further weakness in the EUR/GBP. Yesterday’s surprisingly strong employment data along with slight inflation concerns from the BoE has given investors a reason to be positive about the Pound again despite a dead heat in the parliamentary elections. That being said, the UK does have the potential for negative psychological events of its own, particularly concerning elections and the upcoming budget announcement. Today’s net borrowing data revealed a slight decline, a positive development for a UK government which has accumulated considerable debt. Meanwhile, CBI Industrial Orders declined, reflected the setback we saw in Manufacturing Production last week. Today’s U.S. data was positive mixed with the Philly Index and Current Account data topping expectations while Unemployment Claims and CPI remained relatively flat. The Dollar has shown a mixed reaction thus far, and it will be interesting to see whether the Cable can continue to consolidate regardless of weakness in the Euro. Meanwhile, the Cable is still trading well above our previous downtrend lines, a positive development for the currency pair’s medium-term outlook. However, the Cable must now deal with what is our 3rd tier downtrend line, which runs through 1/28 highs, or the 1.625 area. Tomorrow’s data wire is relatively quiet, meaning currency pairs could follow their respective weekly momentums unless there is another psychological development.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 3/17 lows. As for the topside, the Cable faces multiple downtrend lines along with intraday and 3/17 highs. Our new 3rd tier downtrend line could prove to be a key barometer since it runs through 1/28 highs, or the 1.6275 area.
Present Price: 1.5279
Resistances: 1.5288, 1.5318, 1.5334, 1.5354, 1.5377, 1.5397
Supports:15272, 1.5252, 1.5236, 1.5218, 1.5205, 1.5184
Psychological: 1.53, 1.54, March highs
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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