EUR/USD

Forex News: The testimony of Fed Chair Yellen was shifter 30 minutes earlier yesterday but overall the event did not have a huge impact on the US Dollar. The pair dropped through the 50 period EMA but recovered soon after.

Technical Outlook

After the first drop into 1.1400, price climbed into 1.1450 and then bounced lower from there, threatening support again. This “yo yo” behaviour is likely to end today and we will probably see a break outside the range seen over the last few days. It seems like bearish pressure is increasing but there’s a huge wick in the lower side of the last closed candle and this suggests strong rejection, so probably the day’s direction will be decided by the fundamental side.

Fundamental Outlook

The focus will remain today on the US Dollar for the release of two key indicators: the Consumer Price Index (CPI), which is a main gauge of inflation and the Retail Sales, which represent the major part of overall consumer spending.

The CPI is expected to show a change of 0.1% (previous 0.1%) and the Retail Sales a change of 0.1% compared to the previous 0.3%. Both indicators come out at 12:30 pm GMT and higher than anticipated numbers for either of them are usually beneficial for the US Dollar.

GBP/USD

Yesterday belonged mostly to the bulls and price remained above the 50 period Exponential Moving Average. Janet Yellen’s testimony brought the pair slightly lower but nothing substantial.

Technical Outlook

As long as the pair is trading above the 50 EMA and the Relative Strength Index is not overbought, we expect the current move to extend into 1.2975 – 1.3000 area. If price gets there, by that time the RSI will probably become overbought and this will likely generate a bounce lower because price is not in a strong trend. If 1.2900 is broken to the downside, we will probably see a move closer to 1.2850.

Fundamental Outlook

Today direction will be mainly influenced by the United States economic indicators as the United Kingdom didn’t schedule any important releases for the last day of the week.