2013.01.03: Another day inside the channel?
EUR/USD
Almost immediately after the opening of the market, the EUR/USD shot up for about 100 pips and price touched the upper boundary of the channel that we talked about before rebounding hard and traveling the whole distance back towards the lower boundary of the channel.
Technical Outlook
Lately the horizontal channel seems to be the main technical aspect of the market and price has almost text book reactions when it touches either one of its boundaries. We mentioned this before but the upper boundary of the channel is represented by the resistance formed at 1.3290 and the lower boundary is formed by the support level at 1.3170. If the channel will still contain the pair and the current break of the lower boundary is a false one, then it is most likely that we will see today a rally into higher territory. Of course a real break is not out of the question and if that occurs, we expect an extended move down.
Fundamental Outlook
Today’s fundamental side of the market will be influenced to some extent by the German and Spanish Unemployment Change numbers coming out early in the morning but they are not considered to be high impact economic indicators. Lower numbers are good for the Euro because an economy with less unemployed people is considered a thriving one.
The main fundamental events today come from the United States in the form of the ADP Non-Farm Employment Change (anticipated 134K from a previous of 118K), released at 1:15 pm GMT and the Unemployment Claims which will be released 15 minutes later (anticipated 356K form previous 350K). In the case of the first indicator, higher numbers than expected are good for the currency and for the second indicator, lower numbers are likely to strengthen the currency. The final event that we must keep an eye on comes late at 7:00 pm GMT and it’s the FOMC Meeting Minutes, containing a detailed explanation of the reasons that influenced the FOMC members’ vote on the US interest rate.
GBP/USD
What appeared to be a true break of the resistance formed at 1.6300 turned out to be just a false one, followed by a substantial move down, below the mentioned resistance.
Technical Outlook
Lately the momentum has been strongly bullish for the pair but the recent drop makes our technical view almost neutral. It appears that no clear direction can be established and we recommend caution when trading the GBP/USD, at least until further developments. If price continues down, the level of 1.6175 could provide some support, but sudden moves to the upside (towards 1.6300 again) are not out of the question.
Fundamental Outlook
The most important economic indicator released today for the British Pound is the Construction PMI (09:30 am GMT), with a slight increase being anticipated: 49.6 from a previous of 49.3. It is an index based on the opinions of about 170 Purchasing Managers and better than expected numbers can strengthen the GBP, driving the pair higher. All the US data mentioned earlier will impact our analyzed pair.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.