By Fast Brokers – The Cable is trying to balance above our key medium-term downtrend line originating from November ’09 highs and connecting through January highs as the currency pair extends its decline from Friday. Investor sentiment is still rattled from last week’s disconcerting U.S. data and the risk trade is struggling across the board. The UK was quiet on the data wire again today, meaning the Cable is just following correlative forces for the time being. However, the UK will light up the data wire tomorrow with the release of prelim mortgage approvals, public sector borrowing, and industrial order expectations. Additionally, investors will digest housing data from the U.S. and the RBA’s meeting minutes. If the UK’s data prints positive this could help bolster the Cable and help the currency pair hold above our medium-term downtrend line. Meanwhile, investors are brushing aside negative news from Ireland and Hungary. Moody’s downgraded Ireland’s debt by a notch and Hungary walked away from negotiations with the IMF and EU concerning the remainder of its emergency funds. Even though investors have shrugged at the news, we suggest keeping an eye on the situation in Hungary since EU banks have sizable exposure to Eastern European economies. If the situation deteriorates investor uncertainty could rise and rattle the Euro, a negative for the risk trade as a whole.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 7/7 lows. Additionally, the highly psychological 1.50 level should serve as a solid technical cushion should it be reached. As for the topside, the Cable faces technical barriers in the form of intraday highs and 7/15 highs along with the psychological 1.55 level should it be tested.
Present Price: 1.5217
Resistances: 1.5224, 1.5242, 1.5274, 1.5295, 1.5324, 1.5350
Supports: 1.5204, 1.5184, 1.5164, 1.5140, 1.5111, 1.5079
Psychological: 1.55, 1.50
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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