It looks like the euro and the pound sterling have no space to rise. Both currencies are extremely overbought and market participants are waiting for signs of their correction. It is the only explanation of the fact that the market ignored quite positive macroeconomic data.
For example, the eurozone PMI figures for various spheres exceeded forecasts. Thus, the services PMI advanced to 55.1 points from 48.3 points while economists had expected a rise to 50.8 points. The manufacturing PMI jumped to 51.1 points from 47.4 points. The forecast was 49.8 points. As a result, the composite PMI surged to 54.8 points from 48.5 points. Analysts had forecast a rise to 50.7 points.
In the UK, business activity showed a more significant improvement. Thus, the services PMI jumped to 56.6 points from 47.1 points. Economists had expected an increase to 50.5 points. Business activity in the UK manufacturing sector grew to 53.6 points from 50.1 points. The forecast was 51.5 points. Consequently, the composite PMI soared to 57.1 points from 47.7 points. Analysts had predicted a rise to 50.7 points.
The UK also revealed its retail sales data. Economists had forecast a decline of 7.0% compared to a drop of 12.9% in the previous period. However, in fact, the indicator decreased just by 1.6%. In a month, retail sales volume advanced by 13.9% that twice exceeded the expected level. Nevertheless, the market showed no reaction to such positive news.
If the pound sterling and the euro are not showing dynamic it means that investors are waiting for a signal to reverse. Yesterday, the US unemployment claims figures disappointed market participants. That is why analysts hope that preliminary data on the US business activity will be extremely strong. Thus, the indicator should go above the 50-point threshold that separates expansion from contraction. In other words, such figures together with the fact that the US dollar is extremely oversold may lead to the rise in the US currency. However, if the figures are below the forecasts, the yesterday’s scenario will repeat.
Let’s take a look at the euro/dollar chart. The pair is fluctuating within a range of 1.1590/1.1626. This points to high pressure on the market and accumulation. Speculators are likely to focus on the area of 1.1550/1.1650.
If the price fixes below 1.1590, traders will open a lot of short deals which may return the price to 1.1550. If the price fixes below 1.1550 on a four-hour chart, the changes will be even more significant.
At the same time, the euro/dollar pair may consolidate above 1.1650 on a daily chart that may cause changes in the trend.
The pound/dollar pair once again reached the resistance level at 1.2770. There, the price stopped and pulled back. The pair hit the level for the third time. It means that the main trend is upward, but buyers’ activity is not enough to break the resistance level.
Thus, buy deals could be opened, if the price consolidates above 1.2770 with the targeted level at 1.2810-1.2885.
Sell deals should be opened below 1.2715 with the target at 1.2700-1.2685.
FX Analytics – https://www.instaforex.com/forex_analytics
Forex Calendar – https://www.instaforex.com/forex_calendar
Forex TV from InstaForex – https://www.instaforex.com/instaforex_tv
Forex charts – https://www.instaforex.com/charts
Instant account opening – https://www.instaforex.com/fast_open_live_account
Forex Trading Contests – https://www.instaforex.com/forex_contests
List of official InstaForex blogs:
#forex_news #european_session #instaforex_tv