Daily Analysis: The Consumer Sentiment survey released Friday by the University of Michigan didn’t have a strong impact on the US Dollar, mostly because it came very close to analysts’ expectations, but the pair retraced lower due to overbought conditions signalled by both oscillators.
The move lower seen Friday should be considered just a simple retracement at the moment, not a reversal but it is very possible to extend into the support at 1.0710. As long as this barrier remains intact, our view is bullish, anticipating a move into 1.0800; however, such a long distance will not be travelled today probably, mostly due to the lack of major economic releases, a fact which may generate ranging price action. Also, the oscillators are just coming out of overbought, favouring a touch of support.
Today’s direction will be mainly driven by the technical aspect because the United States and Europe have a lacklustre economic calendar, without any major releases.
Price action was choppy Friday but the buyers managed to remain in control and to keep the pair above 1.2350. Rejection is present and the upside momentum seems to fade away but the medium term bias is still bullish.
Long wicks have started to appear on the last few candles and both oscillators have reached overbought, with price at resistance. These factors suggest that a deeper retracement will soon follow, so we don’t expect to see a break of 1.2420 today but if the pair does move above this level, the extent should be limited. After the potential retracement, we expect the pair to move above 1.2420 and into 1.2480 but this will not happen today unless surprising developments take place.
Similar to the other two currencies, the Pound will not be affected today by major economic releases, so the technical side will be the main market mover.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.