The housing data hinted the sector could be gaining momentum, where building permits surged to 717,000 permits in February from 682,000 in January; and 30,000 above market expectations. Housing starts slipped to 698,000 while January starts were revised up to 706,000. The housing market improvement is mandatory to the sustainability of growth prospects in the U.S.; the FED reiterated numerously the importance of a strong housing market. Thus, good numbers confirm the pace of growth could be picking up.
We have seen the greenback strengthening after the release; before retreating once more, currently hovering around the 50-days SMA. The USDIX, took a hit within the past couple of days, however, the bullish trend remains intact as the current bearish action is considered a downside correction so far, only a dip below 79.00 swing low could push the index lower again for another retest of February's lows at 78.08, and the main trend line for the ascending channel.
After the downside pressure we have seen this morning the EUR/USD rebounded strongly from the key technical support and neckline for the short term inverted head shoulder pattern around 1.3180, currently attempting to retest yesterday's high at 1.3265. Stochastic is gaining bullish momentum, however price is still facing the main resistance among 1.3265-1.3290 a breach above could extend the move initially towards 1.3350. To the downside steady trading below the recent lows around 1.3180 could push for 1.3140-1.3115.
The USD/JPY is under pressure; the pair failed to hold above 83.50 level where it retested the breached ascending trend line before reversing sharply again. Major technical support to watch for resides at 83.20-83.00, where we me see renewed bullish attempts from there. However, pushing below this level should extend the correction deeper to 82.65.
Cable found support above 1.5820; after breaching the descending channel; the pair rallied and built some demand level around 1.5820 and above the 200-days Simple moving average; to push further to the upside. Although settling above the average is a positive sign per se, we still face some key technical levels and the psychological resistance at 1.6000, thus only a sustained break with steady trading above 1.6000 should turn the short and the medium term outlook to bullish. A dip below 1.5820 will send the pair to 1.5745 and maybe lower.