General market theme
Reversals to the upside for both the euro and the pound over the past 24 hours was the main theme of the currency markets as the European currencies looked to change their direction. The euro disregarded the lower than expected Industrial Production reading and hiked higher while the pound also joined it on a rally to the upside, possibly in light of today’s BoE meeting.
Today there’s a host of fresh news and events that will dictate price action and decide the bias for the majors, with the release of the BoE meeting minutes along with the rate decision, while the UK and US Retail Sales and Eurozone inflation data will also shed light on the progress in the major economies around the world.
Price action highlights
The euro spiked higher yesterday to marginally challenge the top end of its sideways trading range reaching the 1.1275 level, but there was no follow-through and the rest of the day was all about a pullback lower.
This morning the single currency is testing the support of the 1.1225 area, and depending on how the EZ inflation data and the US Retail Sales print we might see a breakout from this sideways range after a few days. To the upside the key target lies around the 1.1300 area at first, while a possible retreat lower should target the 1.1150 level in the short-term.
The cable reversed to the upside yesterday after falling briefly below the 1.3150 level in the early hours of the afternoon, however the rest of the US session was all about a move higher, with the pound rallying to the 1.3275 area.
Today the BoE meeting on rate policy and the UK Retail Sales will dictate the price action, but we’re in for a volatile session as the UK currency is already moving this morning with a push lower towards the 1.3200 area. A possibly bullish tone from the BoE could propel the pound higher, with the 1.3350 area being the target in the short term.
Focus of the day
As we already mentioned there’s a host of news and reports pending for today: the BoE rate meeting and the release of the voting minutes, the UK and US Retail Sales figures and the EZ inflation data will all add to the volatility of the day so we would suggest careful trading actions today.
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