Forex News: Brexit in the Limelight Once Again. Pound and Euro Post Massive Gains
Forex News: Yesterday the US Dollar remained under heavy selling pressure for the entire trading session and the pair made huge advances, reaching the resistance zone around 1.2400.
Part of yesterday’s move was triggered by new hints that the United Kingdom – European Union divorce will be smooth, so both the Euro and the Pound strengthened against the US Dollar. The pair is now sitting at a big round number (1.2400) which acts as resistance and this calls for a retracement. Some of yesterday’s buyers are likely to close out their positions due to profit taking and this normally generates a move lower. The overall bias is clearly bullish so after the pullback, we expect higher prices.
All eyes will be on the Euro today for the ECB Interest Rate announcement scheduled at 12:45 pm GMT and followed shortly after by Mario Draghi’s press conference (1:30 pm GMT). The rate is not expected to change (currently 0.00%) but if the ECB President will hint towards changes to the QE program, then the Euro is likely to show strong volatility.
Positive British jobs data combined with hopes of a smooth Brexit were the main ingredients for yesterday’s huge rally that took the price above 1.4200. The pair is now prone to a move lower.
The pair is massively overextended and once the bullish momentum dims down we expect to see a pullback based on profit taking. The Relative Strength Index and Stochastic are both above their respective overbought levels, thus supporting a bounce lower. Of course, the main bias is clearly bullish so we will most likely see higher prices after the retracement.
The United Kingdom didn’t schedule major data releases for today so the technical aspect will decide the pair’s direction.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.