fundamental News - GBP/USD
The EUR/USD pair managed to find some support just ahead of the key
1.2000 psychological mark and regained positive traction on the first
day of a new trading week. The uptick allowed the pair to recover a part
of Friday's sharp losses and was sponsored by
the emergence of some fresh selling around the US dollar. Expectations
that the Fed will keep interest rates near zero levels for a longer
period continued acting as a headwind for the USD. Apart from this, the
underlying bullish sentiment in the financial
markets further undermined the greenback's relative safe-haven status
and provided a modest lift to the major.
On the flip side, the 1.2075-80 region now seems to have emerged as
immediate resistance. This is closely followed by the 1.2100 mark, which
if cleared decisively will negate any negative bias. The next relevant
resistance is pegged near mid-1.2100s, above
which the pair is likely to reclaim the 1.2200 mark. The upward
trajectory could further get extended towards February monthly swing
highs, around the 1.2245 region.
Bulls further took cues from upbeat German Retail Sales figures,
which posted their biggest yearly gains in March since the start of the
COVID-19 pandemic. Adding to this, the Eurozone Manufacturing PMI was
finalized at a record 62.9 in April. The reading
was slightly below the flash estimate but marked the highest level
since the survey began in June 1997. In another positive development,
the European Commission proposed that Member States lift restrictions on
non-essential travel for vaccinated persons travelling
into the bloc. This was seen as another factor that extended some
support to the shared currency.
Conversely, the ISM Manufacturing PMI missed market expectations
and dropped to 60.7 in April, down from the 38-year high level of 64.7
touched in the previous month. The yield on the benchmark 10-year US
government bond fell 2.5 bps in reaction to the
slowing growth in the US manufacturing sector. This, along with not so
optimistic comments by Fed Chair Jerome Powell, saying that the US
economy was doing better but was not out of the woods yet, further
contributed to the intraday USD selling bias. Nevertheless,
the pair rallied over 60 pips from the daily swing lows, albeit
struggled to capitalize on the move.
The pair edged lower during the Asian session on Tuesday and was
pressured by a goodish pickup in the USD demand. In the absence of any
major market-moving economic releases, either from the Eurozone or the
US, the USD price dynamics will play a key role
in influencing the pair's intraday momentum and allow traders to grab
some meaningful opportunities.
Technical analysis
From a technical perspective, the pair’s inability to build on the
overnight positive move suggests that the recent pullback from two-month
tops might still be far from being over. Weakness below the 1.2000 mark
will reaffirm the bearish outlook and turn
the pair vulnerable to accelerate the fall towards the very important
200-day SMA support, around the 1.1940 region. Some follow-through
selling, leading to a subsequent break below the 1.1900 mark should pave
the way for a further near-term depreciating move.
The pair might then drop to test intermediate support near the
1.1860-50 region en-route the 1.1800 mark and the next relevant support
near the 1.1770-65 region.
Expectation: bearish