Gone are the days when there was a sharp correlation between the major pairs that simply made it easy for the traders to build their investment portfolio, but those who are still relying on that correlation we can feel sorry for them.
The euro bounced back from its 1.3400 psychological support and amazed the bearish investors, as the pair has gained more than 80 points since yesterday’s U.S. session. Currently the pair is hovering at the 1.3484 level which is above its critical level of 1.3465 and today’s pivot point of 1.3470 that means it is safe to be bought at this level.
One of the reasons behind this upward move is the not-so-good Philly Fed Manufacturing Index of the United States that dropped from 19.8 units down to 6.5. However, today’s economic indicators are crucial as well where German IFO Business climate data is set to be released in the European session which would be followed by Mr. Draghi’s speech that may talk about the interest rate position within the Eurozone.
Smooth as Aussie
On the contrary, the Australian dollar has been falling constantly for the past 3 days as we mentioned that since it entered the bearish channel it would keep losing against the U.S. dollar. Therefore, within 3 days it has lost more than 200 points and is currently trading at 0.9185 after testing the 0.9167 support level, but the overall outlook is deeply bearish. The short-to-medium term target as mentioned in previous reports was 0.9000 once it breaks 0.9300, so the half way mark already achieved by the pair where more than 160 points are still left and may be achieved very soon.
However, the pair may give some bullish correction of this smooth downward rally where attaining at least 50% of retracement on a Fibonacci scale could be possible that may take the pair to 0.9255 or till 0.9282.
Pound back in Action
In yesterday’s report we said that bulls would remain in control over GBP /USD as long as it moves above 1.6060, and so it did where it has gained around 120 points since yesterday and has tested 1.6200 resistance level. Just trade what you see, because at this time technical levels are more important rather than fundamentals.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org