By Fast Brokers – The Cable is consolidating above our uptrend lines and the psychological 1.60 level as the EUR/USD experiences similar activity. Investors seem a bit indecisive as they digest liquidity tightening in China along with a downbeat earnings report from Alcoa. Meanwhile, Britain’s Trade Balance printed in line with analyst expectations, continuing a theme of strong UK data. However, more attention will likely be placed on tomorrow’s Manufacturing Production number. A solid Manufacturing Production figure could key a pop in the Pound since UK data has been encouraging so far this month. Hence, investors should keep an eye on activity in the EUR/GBP for a directional movement. Meanwhile, the highlight of the week is still on deck with U.S. Retail Sales and an ECB policy meeting on Thursday. Strong U.S. Retail Sales could deflate recent strength in the Cable, while a weak number would likely entice investors to sell off the Greenback and head for the risk trade again. Any dovish language from the ECB could create speculation that the BoE will approach its monitory policy with a similar attitude, a positive catalyst for the Cable. Overall, the contrasting headwinds are keeping the Cable and EUR/USD at bay and we will have to wait and see how upcoming data and news impact the Dollar.
Technically speaking, yesterday’s rally has created some breathing room between present price and the psychological 1.60 level once again. However, the Cable still faces multiple downtrend lines along with previous January highs. Furthermore, the 12/9-12/15 trading range could prove to be a solid barrier should it be reached. Therefore, quite a few obstacles remain considering the extent of December’s downturn. As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with the psychological 1.60 level and previous January lows. Meanwhile, our 3rd tier uptrend line and 1st tier downtrend line are headed for a collision and we notice a similar occurrence in the EUR/USD. Hence, the FX markets could be in for some volatility soon.
Present Price: 1.6135
Resistances: 1.6162, 1.6181, 1.6219, 1.6246, 1.6286, 1.6318
Supports: 1.6108, 1.6071, 1.6052, 1.6028, 1.5991, 1.5950
Psychological: 1.60, January highs and lows, December lows, September lows
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