Coming Up Today (all times GMT)
- GBP Claimant Changes (8:30)
- EUR EU CPI (9:00)
- USD Retail Sales (12:30)
- USD Crude Oil Inventories (14:30)
- USD FOMC Minutes (18:00)
Worse than expected German ZEW Figures, who cares? Uninspiring UK CPI, what's the big deal? The Forex market continues to care about two big things, credit and the economy. Regarding the first, the EURUSD hit selling pressure when it traded below 1.2550 support yesterday after Moody's cut Portugal's credit rating. However, the downside was short lived as a Greek government bond sale went smoothly and indicated that investors are less concerned about a possible Greek default than they were at the beginning of the year. Regarding the economy, risk buying got a shot in the arm yesterday with the official start of the US earnings season. Better than expected figures from market leaders Alcoa and Chevron boosted stocks and led to risk appetite buying in the Forex markets.
The above mentioned risk rally helped the EURUSD bounce back from 1.2525 lows to soar back above 1.2700. Currently the pair is at 1.2705 after hitting an eight week high of 1.2735 earlier in the morning. Looking ahead Forex traders will watch intraday support of 1.2690. If that area holds it may indicate an emergence of buyers that are stepping up to accumulate positions in the pair and could signal another leg higher.
Forex traders ignored the overall year over year CPI data yesterday and keyed in on the low monthly data as they bid up the GBPUSD over 250 pips to 1.5240. Also helping was the overall risk rally taking place. Looking ahead, today's UK Claimant numbers should lead to volatility in the pair. However, if yesterday's action was any indicator, the GBPUSD could rally today if stock markets continue their ascent higher, even if Claimant numbers are worse than expected.
Support/Resistance 1.5140/ 1.5275