Forex News: Yesterday’s trading session was slow, as anticipated and most of this behaviour was generated by the fact that U.S. banks were closed, celebrating Martin Luther King Day. Europe didn’t release any major indicators, further contributing to the lack of volatility.
Price is sliding towards 1.0870 and has touched the 50 period Exponential Moving Average which is angled slightly to the upside. This is a good place for price to bounce higher but the lack of clear movement makes it hard to anticipate the next direction. Nonetheless, a break of the 50 EMA and of 1.0870 would open the door for a touch of 1.0800.
The German ZEW Economic Sentiment is released today at 10:00 am GMT and expected to drop to 8.2 from the previous 16.1. The survey expresses the opinions of about 275 German analysts and investors about a 6-month outlook and usually creates decent volatility, with higher numbers being beneficial for the Euro.
At the same time the Final CPI of the Eurozone comes out, showing the state of inflation in the Euro area. The Final version is the least important but even so, higher values than the forecast 0.2% can bring Euro strength.
The Pound edged higher against the American Dollar yesterday but the climb was not substantial and first potential resistance was not touched.
The downtrend is still in full swing and most of yesterday’s movement was just a normal reaction based on low volatility. However, the pair is still oversold and we anticipate more upside action soon, probably until 1.4350 is touched, but a lot will depend on today’s inflation data released by the United Kingdom. The oscillators are close to their respective oversold levels, suggesting that a move up is next but they have been so for a long while.
At 9:30 am GMT the British Consumer Price Index is released and anticipated to show a change of 0.1%, same as previous. This is the main gauge of inflation and is currently considered too low so any climb is viewed as beneficial for the Pound. Usually the release creates decent volatility, especially if the actual number differs from forecast so caution is recommended.