Last week, especially its second part was characterized by irregular and difficult to trade movement, although the U.S. posted better than estimated data for almost all economic indicators which were released. Most of this irregular movement was generated by increasingly thin volume due to the approaching Easter Holidays.
The way price moved last week doesn’t offer a lot of hints about future direction and the beginning of this week will also be characterized by low volume since Monday most of the world celebrates Easter. However, from a daily chart perspective, the pair is still printing higher lows and higher highs and the 200-period Exponential Moving Average is angled upwards so we can still consider this an uptrend. The main levels to watch remain 1.3967 as resistance and 1.3700 as support. Diagonal support is represented by the uptrend line drawn from July last year.
Monday most banks around the world will be closed in celebration of Easter and the same is true for many brokerages so trading will be interrupted by this event. Tuesday the U.S. Existing Home Sales numbers come out and although usually it’s regarded as a medium-impact indicator, this release might gain extra weight because it’s the only notable indicator of the day.
Wednesday the French and German Manufacturing Purchasing Managers’ Indexes (PMI) are released, offering insights into the opinions of purchasing managers from the manufacturing sector regarding the current and future economic conditions. Higher values suggest optimism and are usually beneficial for the Euro. The U.S. New Home Sales are announced the same day and alongside the Existing Home Sales will offer more information about the state of the American house-market.
The German Ifo Business Climate (survey of about 7,000 businesses focused towards business conditions) is Thursday’s main release coming out of the Euro Zone, while the U.S. will announce the Durable Goods Orders later in the day. The indicator tracks changes in orders placed for goods with a life expectancy of at least three years but the impact varies, depending on how big is the difference between estimated and actual numbers. Friday will be a slow day, with no major indicator releases.
The Pound was strongly and positively affected last week by a drop of United Kingdom’s unemployment rate but other than that, the pair had slow, back and forth movement.
On a Daily chart the pair printed a triple top at 1.6820; this is a bearish pattern which announces a possible trend reversal. Also we must note the overbought condition of the Stochastic oscillator, which is another sign that bearish moves are likely to occur. Volatility will fluctuate in the beginning of the week due to the Easter Holidays, but once things are back to normal, we anticipate moves south, with 1.6750 being the first support.
Just two releases will have a strong effect on the Pound this week: the first one is the Bank of England Meeting Minutes, which are released Wednesday and will contain details of the Bank’s latest meeting and a breakdown of the MPC members’ votes on the Interest Rate and Asset Purchase Facility Value. The second event comes out Friday in the form of the U.K. Retail Sales, which represent the major part of the entire consumer spending; values which surpass estimates are considered beneficial for the Pound. Throughout the week, the pair’s direction will be affected by U.S. releases as well.