EUR/USD

Germany’s Manufacturing Purchasing Managers’ Index posted a value of 53.8, worse than the estimated 54.7 and the Euro weakened as a result; however, later in the day the gains of the US Dollar were erased on the back of disappointing US economic data. An emergency G7 meeting took place in The Hague to discuss the Ukraine crisis and this triggered a sharp bullish move.

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 Technical Overview

The confluence zone located at 1.3770 proved too hard to break as price tried twice to move below it but failed so the bulls are trying to take back control of the pair. However, yesterday’s break of 1.3830 was mostly triggered by the G7 meeting and by the Ukrainian crisis so we do not consider it a true break unless a re-test occurs and a bounce higher follows. A move back below 1.3830 would show that we are dealing with a fake breakout but keep in mind that trading will be made difficult by the political situation and any news regarding the Ukraine crisis may have a strong impact on the pair’s movement.

Fundamental Overview

The first major data release of the day is the German Ifo Business Climate which comes out at 9:00 am GMT and is expected to decrease slightly from the previous 111.3 to 110.9. The strength of this survey comes from its large sample of about 7,000 businesses which are asked to offer their view on economic conditions for the next 6 months. Higher than estimated values are beneficial for the Euro and have the ability to take the pair higher.

At 2:00 pm GMT the US consumer Confidence is announced and is expected to increase from the current 78.1 to 78.7. Confidence among consumers is highly correlated with consumer spending because a person who is confident about the economic state of the country is likely to spend more and that’s why higher than anticipated numbers for today’s indicator will most likely strengthen the greenback.

GBP/USD

The pair had a flat day before the G7 Meetings and the US Manufacturing data release but overall trading on lower time frames was extremely difficult due to whipsaws generated by political unrest.

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Technical Overview

Yesterday’s back and forth movement doesn’t offer enough clues a prediction of future direction but for the moment, the level of 1.6480 is holding as support and the Stochastic on a four hour chart is below 30, curling upwards. These are bullish signs, but keep in mind that the Stochastic can stay below 30 for a long time and the latest direction is bearish. The first resistance is located at 1.6565 but we consider the day’s direction will be decided by the fundamental aspect

Fundamental Overview

United Kingdom’s Consumer Price Index which is the most important gauge of British inflation is released today at 9:30 am GMT. The estimated figure is 1.7%, a decrease from the previous 1.9%. Bank of England uses the CPI as an inflation target and adjusts the Interest Rate in order to prevent inflation to go outside certain ranges; usually a higher CPI is considered beneficial for the Pound. Of course, the US data will have a direct impact on the pair and the same is valid for any developments regarding the Ukrainian situation.