Pullbacks Expected, Ahead of British Consumer Price Index
Forex News: Eurozone’s Final CPI that came out yesterday, matched the market consensus and the pair remained mostly unfazed by the release. Overall the session was mixed and the pair remained in a tight range.Technical Outlook
After a brief dip below 1.1450, the Euro rallied and nullified the early losses. Now the pair seems headed towards the resistance at 1.1490 – 1.1500 but once that zone is reached, we expect to see a bounce lower. If the zone is broken, the extent of the move above it should be limited, mostly because price is overextended and the bearish pressure has increased. To the downside, if 1.1450 is broken, we expect a touch of the 50 EMA.Fundamental Outlook
At 9:00 am GMT the German ZEW Economic Sentiment survey comes out, showing the opinions of about 275 German professional analysts and investors regarding the health of the German economy, as well as a 6 month outlook. The anticipated number is 17.6 and higher values usually strengthen the Euro but the impact of this survey has started to decrease.
The Pound wasn’t affected by important economic data yesterday and the pair retraced lower, mostly due to technical reasons that we mentioned in yesterday’s briefing.Technical Outlook
Bearish pressure has increased and we expect to see a move lower, possibly into the zone around 1.3030. Both the Stochastic and Relative Strength Index are turning down, coming out of overbought territory, which is a fact that supports a move lower. However, the pair still has strong upside momentum so after this potential pullback, the chances of a break of 1.3100 resistance will increase.Fundamental Outlook
A high impact indicator will affect the Pound today: the British Consumer Price Index, which is the main gauge of inflation and is closely watched by the Bank of England when they decide on where to set the interest rate. Higher inflation eventually triggers a rate hike and this strengthens the Pound. The time of the release is 8:30 am GMT and the expected value is 2.9%.