Forex News: Resistance is Shattered as a New Wave of US Dollar Weakness Hits the Market
Forex News: The pair showed choppy movement early during yesterday’s session but in the afternoon the US Dollar came under heavy selling pressure and price shot through 1.1875 resistance.
After failing to break 1.1825 support or to close below the 50 period Exponential Moving Average, the pair started to rally strongly without any high impact news behind the move. Price is now out of the consolidation area between 1.1875 and 1.1825, showing strong momentum, facts which make us anticipate a touch of 1.1945 – 1.1950 resistance in the near term. If price reaches that mark we expect it to bounce lower, at least momentarily.
The day’s most notable release will be the U.S. Manufacturing PMI, which is a survey of about 400 purchasing managers who are asked to rate business conditions in the manufacturing sector. The survey acts as a leading indicator of economic health and optimism, with higher numbers strengthening the greenback. The time of release is 3:00 pm GMT and the expected reading is 58.4.
The pair continued its ascension yesterday and moved through the psychological resistance at 1.3500. The move was mostly due to US Dollar weakness and a positive sentiment surrounding the Pound.
After the initial push above 1.3450, price returned to re-test the level, which rejected it higher, turning into support. This level was a strong resistance (better seen on a Daily chart), so we can expect it to act as strong support in the future. As long as the pair remains above 1.3500, the next destination is 1.3600 but that mark will not be hit today probably, unless surprises happen. The Relative Strength Index is approaching overbought, warning of potential retracements.
The British Manufacturing PMI is today’s only highlight for the Pound, scheduled at 9:30 am GMT and expected to show a reading of 56.6. Just like the U.S. PMI mentioned above, this survey tries to gauge optimism among purchasing managers and usually strengthens the Pound if it shows a reading above expectations.
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.