Over the last 24 hours the economic calendar was pretty much empty and that allowed the major currencies to breathe a bit easier and tone down the volatility we’ve seen during and especially at the end of last week. The week ahead of us is predicted to be much more quiet than the one before as there will be only a handful of important market events to attract traders’ attention.
The main theme of discussion in the markets remains the monetary policy of the major central banks and to get into more detail the divergence of the various policies. There is a clear distinction between the courses drawn from the Fed and the ECB and that will be one of the major drivers as we draw near the end of the year while the BoE is walking a fine line of data-dependent decisions.
As a result of the lack of any news the price action over the past 24 hours was pretty smooth and actually allowed the likes of the Euro and the Pound to correct higher against the advancing Dollar. The bias for the Single currency is clearly bearish and as we mentioned in our previous reports all rallies to the upside should be considered selling opportunities. However the British Pound is a different story and much could change depending on the way the employment report will print on Wednesday.
Taking a closer look at the price action yesterday, the Euro bounced off the 1.0700 lows and traded almost to the 1.0800 level on the back of the reduced participation in the market on Monday and the lack of interest from traders. The 1.0700 support is what defines the Euro’s outlook now and a break below this area will clear the path for lower levels. However since there will be little on the calendar today we could see a period of consolidation for now as the Euro will try and catch its breath but we should not forget that the bias is bearish and we should be on the lookout for a break lower once again.
The Cable followed the Euro higher yesterday and gained some ground back from the Dollar making its way above the 1.5100 level overnight. The UK currency has dropped a vast amount over the past few days so a correction is not unreasonable, however as we mentioned above the short-term outlook of the currency will be decided on the way the employment report prints tomorrow.
The BoE is always flexible and has mentioned that they rate-hiking agenda is data-dependent so a positive reading tomorrow might allow the Pound to gain back some of the ground lost over the past few days. For the day ahead we should be careful and not take any major decisions as the tables could turn tomorrow.
"Disclaimer: The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought."