Forex News: Pound in the Limelight as BOE Governor Carney Testifies on Inflation and Economic Outlook
Forex News: Price dropped very early during yesterday’s trading session but support pushed it higher and all losses were nullified. The Euro was initially unfazed by Draghi’s testimony, who mentioned that economic expansion is solid but was less hawkish about inflation.
After dropping into the confluence zone created by the 50 period Exponential Moving Average and the horizontal support at 1.1735, the pair bounced strongly to the upside, moving above the session’s opening price. However, the last candles are showing bearish pressure and price dropped once again, so it’s unclear what the next move will be. For the short term we expect to see another encounter with the confluence zone mentioned earlier and the way price behaves there will offer more clues about future direction.
The Euro will have a light economic day, without any major data coming out and on the US Dollar side the only notable event is the release of the Existing Home Sales numbers, scheduled at 3:00 pm GMT. The indicator shows the annualized number of houses sold during the previous month, excluding new buildings. The expected number is 5.42 Million and higher values show a healthy economy, so the Dollar is positively affected.
The Pound showed bullish momentum since early in yesterday’s trading session and this allowed the pair to climb for a perfect touch of 1.3280 resistance.
Current momentum favours the bulls but as long as 1.3280 resistance remains intact, the probability of a drop is high. The first lower barrier and form of support is represented by the 50 period Exponential Moving Average, followed by 1.3175. To the upside, a break of 1.3280 would open the door for the key level at 1.3320.
The Inflation Report Hearings take place today at 10:00 am GMT and during these meetings, Bank of England Governor Mark Carney will testify on inflation and economic outlook before the Parliament's Treasury Committee. Depending on Carney’s attitude and answers, the Pound is likely to show increased volatility, so caution is advised.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.