The pair is bouncing lately between support and resistance and yesterday’s higher than estimated value of the U.S. Durable Goods Orders didn’t manage to trigger a substantial drop. However, the effects of the higher reading are likely to be seen in the near future, surrounding the greenback with a positive sentiment.
At the moment the pair is trading near the confluence zone represented by the 200-period moving average and the support level of 1.3770 but has been confined for the entire week between 1.3830 resistance and 1.3770 support. The market lacks clear direction and an accurate prediction is difficult, but a break of the confluence zone mentioned above will most likely trigger a move into 1.3700 support; on the other hand, a break of 1.3830 resistance will shift control in favor of the bulls.
The Euro has a slow day ahead in terms of economic data releases so all eyes will be on the United States for the release of the Unemployment Claims scheduled at 12:30 pm GMT and expected to increase from the previous 320K to 326K. The indicator tracks changes in the number of unemployed people in the U.S. during the previous week and a higher number is considered detrimental for the economy because unemployment levels are directly correlated with consumer spending.
Later in the day, at 2:00 pm GMT the US Pending Home Sales numbers are released, with no anticipated change from the current 0.1%. Houses which are under contract to be sold but still awaiting the closing transaction are considered “pending” and usually, a higher value is beneficial for the greenback because the housing market has always been an important part of the American economy.
The Pound had a bullish day yesterday on the back of comments about a potential interest rate increase made by a Bank of England official. The rally took price into resistance and the USD bulls didn’t make their presence known.
The resistance located at 1.6565 was touched yesterday and the four-hour 200 Exponential Moving Average is in close vicinity. This creates a stronger resistance zone but 1.6600 which is an important level may act as a magnet to price so we might see a touch of this resistance before a move south occurs. The Pound will be highly affected by the data released today and this will probably determine the day’s direction.
At 9:30 am GMT the United Kingdom will announce the Retail Sales, a high-impact indicator which is expected to increase from the previous -1.5% to 0.5%. Sales made at a retail level represent the main part of the entire consumer spending which in turn represents a major part of the economy so better than expected numbers for today’s release have the potential to strengthen the Pound and take the pair higher. As always, the U.S. events will directly affect the pair’s movement.