The biggest story was the British pound, which fell sharply against the U.S. dollar after data showed U.K. industrial production unexpectedly contracted in November. The weak report highlight the uncertain nature of U.K. growth, strengthening the Bank of England's less hawkish policy stance. The BoE is scheduled to announce its monetary policy decision on Thursday alongside with the release of the MPC minutes. The minutes my reveal, inter alia, policy maker's thinking concerning China's slowdown and its possible effects on the U.K. economy.
We noted in Friday's analysis that there is no major support until 1.4350 in the GBP/USD. And in fact, GBP successfully bounced back from $ 1.4351, showing a relief rally towards 1.45. We see a current support at 1.4420. Once the pair breaks again below 1.4385, it could slide back towards 1.4350 and 1.4230.
There was little consistency in the euro's performance on Tuesday. The EUR/USD trended slightly lower but remained firmly above the 1.08-barrier. Let's take a brief look at the technical side:
EUR/USD
Euro bears may detect a possible double-top or even a head-shoulders-pattern in the 4-hour-chart putting pressure on the euro after in case of a break below 1.08. If these patterns prove to be correct, we could see the euro tumbling towards 1.0750 and 1.0735. Below 1.0730 it could even go lower towards 1.0670. For any bullish engagements it might be smart to wait for the price to exceed the 1.0860-level and further the 1.09-resistance.
Today we will have Eurozone Industrial Production, scheduled for release at 10:00 GMT and the Fed's Beige Book due at 19:00 GMT. Both releases are second-tier economic reports and not expected to determine a new direction.
Here are our daily signal alerts:
EUR/USD
Long at 1.0865 SL 25 TP 30-35
Short at 1.0790 SL 25 TP 30-40
GBP/USD
Long at 1.4480 SL 25 TP 30-35
Short at 1.4410 SL 25 TP 20, 40
We wish you good trades and many pips!
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