Forex News: The European economic data released yesterday gave the Euro a boost and the pair continued to climb towards resistance, generating another bullish day.
The pair travels from support to resistance and vice-versa lately so if this behaviour continues, we are likely to see a reversal when the zone around 1.0945 is touched. A move into 1.0980 would probably make both the Stochastic and Relative Strength Index overbought, a fact that would increase the chances of a bounce lower. Today’s price direction will be affected by the U.S. employment data, but the candles are already showing signs of rejection so we may see bearish price action even if the data is neutral.
The day’s main event is the release of the ADP Non-Farm Employment Change, scheduled at 1:15 pm GMT. This report is put together by a privately owned company and doesn’t have the huge impact of the Non-Farm Payrolls that come out 2 days later, but nonetheless it offers a first look into United States employment and can create strong volatility. Usually, higher numbers than the forecast 193K are beneficial for the US Dollar and take the pair lower.
The pair had a mixed session yesterday as the British Construction PMI disappointed, weakening the Pound. However, the bears lacked the strength to take price below support and a bounce higher followed.
The pair bounced at 1.4350 as showed by a four hour candle with a long wick, thus now we can consider this level support. A move below it should be treated like a break of support and should be only traded on the re-test but our short term bias is bullish for a touch of 1.4475. However, the upside movement should be limited by the overbought condition of the Stochastic. Both the Pound and the US Dollar will be affected by economic indicators today so the technical side will be somewhat secondary.
The British Services PMI is released at 9:30 am GMT, showing the opinions of purchasing managers from the services sector about business conditions in the said sector and acting as a leading indicator of economic health. The survey has a medium impact on the Pound but nonetheless, a higher value than the forecast 55.4 can strengthen the Pound.