EUR/USD

Forex News: European PMI values were mixed Friday but the pair had a bullish day nonetheless, mostly on the back of US Dollar weakness. The pair is now trading above previous resistance and the short term bias is bullish.

Technical Outlook

The 50 period Exponential Moving Average and the resistance at 1.1170 were broken decisively Friday and this makes us anticipate a climb into 1.1240, followed by a small bounce lower. The Relative Strength Index will probably become overbought by the time price reaches the mentioned resistance and a clear trend is not in place, so an overbought oscillator is likely to trigger a move lower. If the pair doesn’t reach the mentioned target and instead starts to move lower, we expect a touch of 1.1120 today or possibly tomorrow.

Fundamental Outlook

Today’s first release is the German IFO Business Climate, a survey with a very large sample of about 7,000 businesses that tries to gauge the respondents’ opinions regarding economic conditions, as well as a 6 month outlook. The time of the release is 8:00 am and the expected reading is 114.7; higher numbers show optimism and usually strengthen the currency.

Later in the day, at 12:30 pm GMT the U.S. Durable Goods Orders are released, showing changes in the total value of orders placed for goods with a life expectancy of at least 3 years. A higher change than the forecast 0.4% suggests increased economic activity and usually strengthens the US Dollar.

The European Central Bank Forum on Central Banking starts today in Portugal and ECB President Mario Draghi will deliver an opening statement at 5:30 pm GMT. The Euro may react strongly to his speech, so caution is recommended.

GBP/USD

Friday the pair had a bullish bias and climbed above the 50 period Exponential Moving Average but started to show indecision after breaking this resistance. Overall price action remains choppy and without clear direction.

Technical Outlook

The move above 1.2690 and above the 50 period Exponential Moving Average opens the door for a touch of 1.2770, but as seen from Friday’s price action, the last few candles are showing long wicks and this is a sign of indecision. As long as the pair is trading above the 50 EMA our bias is slightly bullish but given the current situation, a drop could happen anytime.

Fundamental Outlook

There are no notable indicators on the Pound’s economic calendar for today so the pair’s direction will be mostly decided by the U.S. Durable Goods and the technical aspect.