The Pound was somewhat bullish yesterday, but control doesn’t clearly belong to either side at least from a short-to-medium perspective.
GBP/USD
Today we expect some stronger movement due to the UK Consumer Price Index announcement.
The Big Picture
Today’s main event is the release of the British Consumer Price Index (main gauge of inflation), scheduled at 8:30 am GMT. The expected change is 2.4% (yearly change) and higher numbers usually strengthen the Pound, but the impact is muted if the actual number matches the forecast.
Deciphering the Technical Chart
Same as with the EUR/USD, the bias is neutral as we are waiting for the British CPI and Fed cluster of events to see whether the bulls or bears win the battle. The pair broke a bullish trend line to the downside but now it is re-testing it from below, which is a common occurrence; the result will probably influence the next direction. A move above it will take price into the resistance at 1.3475 – 1.3500 (technical and psychological resistance), while a bounce lower from the trend line will make 1.3350 the first target.
Support zones: 100 period SMA and 1.3350
Resistance zones: Bullish trend line and 1.3475 – 1.3500
Possible scenarios: Dependent on the fundamental scene. High volatility expected, with unclear direction at the time of writing.
FOMC in ‘Rapid Fire’ Mode: Rate Statement, Economic Projections and Press Conference on Tap
EUR/USD
The US Dollar has been on a tear lately, bringing the EUR/USD pair down to 1.1500 after breaking the consolidation zone between 1.2500 and 1.2200 created during the early stages of the current year. However, it seems that bearish pressure is starting to subside, and we can see a strong bounce at psychological support (Weekly chart below).
The Big Picture
The Fed is preparing to announce the interest rate on Wednesday June 13 at 6:00 pm GMT, with an expected hike from <1.75% to <2.00%. Often the expected hike is already priced into the market, so the actual announcement doesn’t generate huge movement. The FOMC will also release a Rate Statement and a set of Economic Projections (same date and time), which may influence the pair’s direction, depending on how many hints about future monetary policy will be revealed.
Half an hour later, at 6:30 pm GMT, Fed Chair Powell will hold a Press Conference, discussing the FOMC Rate decision and answering questions from journalists. This is when the greenback usually pops either to the upside or downside, but the direction is totally dependent on what the Chair has to say.
Deciphering the Technical Chart
Lately the bulls have been on a run and price is supported by a reasonably strong bullish trend line but from a longer-term perspective the balance is tilted towards the bears, so a technical prediction is hard to make, especially considering the cluster of events mentioned earlier.
A break of the bullish trend line would make the 100 period Simple Moving Average the first target, followed in the long run by the key support at 1.1500. To the upside, we have resistance around 1.1850 followed by the key handle at 1.2000. Of course, we don’t expect these long-term targets to be reached in the very near future unless something surprising happens.
Support zones: The bullish trend line as immediate support, followed by SMA 100
Resistance zones: 1.1840 – 1.1850 followed by 1.2000, which is a major technical and psychological level
Possible scenarios: The bias is neutral and price movement will be determined by the Fed events. The last few candles are showing long wicks in both their upper and lower sides, which is a clear sign of indecision and further supports this neutral bias.
