The euro came under pressure yesterday and dropped below 1.07. Given the bearish bias in the EUR/USD we had hoped for a steeper downward move towards 1.0650 but our efforts to let our winning short-trade run have finally not been rewarded. The euro marked a current low at 1.0674 from where it started a relief rally, heading currently towards 1.08.
Sterling traders have been waiting for a breakout of the cable's tight trading range but we got rather a fake-out than successful breakouts. The British pound only showed a significant upward move during the Asian session, climbing to a high of 1.5186. The current strength is due the U.K. Labor Market report which is scheduled for release today at 9:30 GMT. Market participants expect the report to show an improvement in employment conditions, focusing on accelerating wage growth. If data meets expectations and comes in with strong numbers, GBP could make a run for 1.5220. Bear in mind that investors will be looking for opportunities to sell sterling at higher levels on an overall bullish sentiment for the U.S. dollar. The Bank of England will follow the Federal Reserve in raising interest rates, but a U.K. rate hike could only be possible around the middle of 2016.
GBP/USD
In short-term time frames, GBP could test the 1.52-mark with a possible extension to 1.5220. Depending on the labor market data, stronger than estimated numbers may push the pair above 1.5220, but traders should be careful. Any disappointments could revive the dollar's strength, driving GBP to 1.5125 (support line) and 1.51. Below 1.5090 we will favor a bearish bias for the pair.
Euro traders will listen to comments from ECB President Mario Draghi who is due to speak in London today at 13:15 GMT. If he supports the ECB's readiness to ease, the euro could quickly continue its recent downtrend.
Here are our daily signal alerts:
EUR/USD
Long at 1.0790 SL 25 TP 40
Short at 1.0715 SL 25 TP 30-40
GBP/USD
Long at 1.5187 SL 25 TP 30-35
Short at 1.5115 SL 25 TP 20, 50
We wish you good trades and many pips!
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