The pair continues to trade in the long-term wide lateral channel. In the middle of the previous trading week the pair started considerable reduction in view of the growth of investor demand for USD as a result of favorable releases on the labor market and economic growth rate in Q3 2017. GDP data was lower than in the previous period but still considerably surpassed the consensus forecast.
US currency also continued to grow following the impulse. USD dominated in the dual-currency basket which gave it more investor interest. At the beginning of the week USD lost demand and its price rapidly dropped. The pound showed strong resistance to the growth of USD in view of positive fundamental data from the UK.
No key macroeconomic releases are due from the USA today. This week special attention should be paid to the labor market and the Fed’s decision on the interest rate. Britain will respond with the minutes of the Bank of England and the decision on the interest rates and volumes of stimulation measures. Also, the head of the Bank of England is to make a speech.
Support and resistance
In the second half of the trading week the market is likely to be highly volatile. It is difficult to determine the direction of the pair as everything will depend on the decisions of US and UK regulators. Despite the growth of US currency in the previous two weeks, the pair failed to break the long-term upward trend, therefore the main scenario is upward movement within the trend with targets at 1.3270, 1.3350, 1.3400. Technical indicators still don’t give a clear signal: MACD signal line is near the zero mark, and Bollinger Bands are horizontal.
Support levels: 1.3200, 1.3175, 1.3150, 1.3120, 1.3110, 1.3020, 1.3000.
Resistance levels: 1.3225, 1.3270, 1.3310, 1.3320, 1.3350, 1.3400, 1.3450, 1.3520.
In this situation long positions may be opened within the trend with targets at 1.3270, 1.3310, 1.3400 and stop-loss at 1.3150.
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