Previous Gains Erased, Pairs Below Resistance Once More
Forex News: The breakout seen a day before was short lived and the pair dropped after coming close to the resistance at 1.1840. Most of the trading session belonged to the bears and at the time of writing the pair is trading below the 50 EMA.Technical Outlook
If the sellers can keep the pair below the 50 period Exponential Moving Average, we will most likely see a quick move into the support zone between 1.1713 and 1.1700. This is a very important zone, where price was rejected several times, so a break (followed by a re test from below) will tilt the medium term balance in the favour of the bears. A quick move above 1.1775 will increase the probability of a touch of 1.1840.Fundamental Outlook
Early at 7:00 am GMT, ECB President Mario Draghi will deliver a speech at the 6th Lindau Meeting on Economic Sciences, in Germany. We don’t expect the speech to have a tremendous impact but caution is recommended nonetheless.
At 7:30 am GMT the German Manufacturing PMI is released, showing the opinions of purchasing managers on the overall state of the German manufacturing sector. The expected number is 57.8 and a higher number usually strengthens the Euro because it shows optimism. Also at 7:30 am GMT, the same indicator but for the German Services sector will be released. The forecast is 53.3 and the impact is medium.
The British Public Sector Net Borrowing posted a better than expected value but despite this, the Pound dropped and broke 1.2850 support. This shows overall weakness and makes the outlook bearish.Technical Outlook
Despite positive economic data, the Pound is losing ground and now the important level at 1.2850 is clearly broken. The pair is facing a hurdle at 1.2815 but a more important level is located at 1.2770 and we expect a touch in the near future. The Relative Strength Index is approaching oversold, warning of a potential retracement higher before or soon after the break of 1.2815.Fundamental Outlook
The Pound’s economic calendar is light today, without any major economic releases, so the technical aspect will decide market direction.