Sterling is firm so far as supported by buying in EUR/GBP cross. BoE minutes released today show 9-0 vote in April to keep policy rate at 0.5% as well as to maintain the asset purchase program at 200B pound. At the last BOE meeting before election (May's meeting is postponed to May 10, a Monday after general election on May 6), policymakers refrained from saying anything controversial. Therefore, contents of the minutes were rather standard More in BOE Kept Rates and Asset Buying Program Unchanged. Members Silent ahead of Election. Data from UK saw claimant count dropped more than expected by -32.9k in March, which was a good sign. However, unemployment rise expectedly rose to 8.0% in February, and countered the positive effect on markets.
Dollar index's recovery from 80.04 resumes today and edges higher to 81.33 so far, thanks to weakness in Euro. Further rise would be mildly in favor as long as 80.75 minor support holds. But after all, decisive break of 82.24 resistance is needed to confirm medium term rally resumption. Otherwise, consolidation from there would likely continue with one more fall to correct the whole five wave rally from 2009 low of 74.19.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3401; (P) 1.3461 (R1) 1.3495; More.
EUR/USD drops further to as low as 1.3436 so far and intraday bias remains on the downside for 1.3266/82 support zone. As discussed before, correction from 1.3266 might have completed with three waves up to 1.3691 already. Decisive break of 1.3266 will confirm medium term fall resumption to 1.3 psychological level next. On the upside, above 1.3447 minor resistance will turn intraday bias neutral first. Break of 1.3691 will indicate that correction from 1.3266 is still in progress for 1.3817 before completion.
In the bigger picture, EUR/USD's fall from 1.5143 has possibly completed the five wave impulsive sequence already (1.4217, 1.4578, 1.3443, 1.3817, 1.3266) on bullish convergence conditions in daily MACD and RSI. Some lengthier consolidation would now be seen with risk of stronger rebound. Nevertheless, we'd expect upside to be limited by 38.2% retracement of 1.5143 to 1.3266 at 1.3983, which is close to 1.4 psychological level, and bring down trend resumption. The overall bearish outlook remains unchanged. That is, the three wave consolidation from 2008 low of 1.2329 has completed at 1.5143 already and fall from there is resuming whole down trend from 2008 high of 1.6039. Such decline is expected to break through 1.2329 low eventually.