- 51% of all pending orders are to sell the Sterling
- 54% of all open positions are long
- Immediate resistance is at 1.2540
- The closest support is around 1.2490
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Upcoming events: US Empire State Manufacturing Index, US NAHB Housing Market Index, US Building Permits, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
US consumer prices fell unexpectedly last month, marking the first decline in more than a year, official figures revealed on Friday. The Labour Department reported its CPI dropped 0.3% in March, following the preceding month's gain of 0.1%, while the so-called core CPI, which excludes volatile items, fell 0.1% in the reported month, following February's 0.2% increase. Meanwhile, market analysts expected the CPI and the core CPI to come in at 0.0% and 0.2%, respectively. According to the Labour Department, the decline in inflation was driven by lower gasoline and telephone services prices, which plunged 6.2% and 7.0%, accordingly. However, the price food advanced 0.3%, while the cost of medical care climbed 0.4% last month. Prices of motor vehicles and apparel declined 0.3% and 0.7%, respectively. The Labour Department reported also that retail sales fell 0.2% in March amid lower demand for automobiles, while analysts anticipated a 0.1% increase.
Moreover, the preceding month's gain of 0.1% was revised down to a -0.3%. Excluding volatile items, retail sales came in at 0.0%, below expectations for a 0.1% rise but in line with February's revised reading. Friday's data suggested that US economic growth slowed significantly during the Q1 of 2017.
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Another quiet Monday
Monday is a relatively quiet day in terms of fundamental data, as it usually is. Due to Easter holidays only events from the US will be due, namely the Empire State Manufacturing Index. It gauges business conditions for the New York manufacturers. A positive result is bullish for the USD, while a negative has a negative effect on the US Dollar. The NAHB Housing Market Index is also worth paying attention to. It presents home sales and expected home buildings in the future indicating housing market trend in the US. The growth rate of the housing market affects the USD volatility.
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GBP/USD risks breaking the down-trend
Poor US fundamentals on Friday allowed the British Pound to erase most of Thursday's losses against the US Dollar, causing the six-month down-trend to be put to the test again today. From the technical perspective the GBP/USD currency pair should now undergo another decline, with the weekly pivot point and the 20-day SMA circa 1.2490 limiting the losses, assuming the 1.25 major level is breached. However, technical indicators keep giving bullish signals in the daily timeframe, suggesting the trend-line might be pierced soon. A breach would not imply a complete trend reversal, as the 200-day SMA near 1.2930 is required to be overcome for that to occur.
Daily chart
No major changes occurred on the hourly chart, as the Cable mostly shown signs of consolidation. There is still some psychological resistance around 1.2575, a point above which the exchange rate was unable to hold for long. Due to bank holidays today, the GBP/USD pair is likely to trade sideways between 1.25 and 1.2575.Hourly chart
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Traders mostly bullish
Bulls barely remain in control, as 54% of all open positions are long. At the same time, 51% of all pending orders are to sell the Sterling.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains somewhat bearish, but there are still not that many more bears than bulls, namely 52% of all open positions are short and the remaining 48% are long. Meanwhile, sentiment at Saxo Bank slightly worsened over the weekend, with 54% of traders now being long and the other 46% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.26 major level, as 51% of survey participants believe so. While the current price is around 1.25, the average forecast for July 17 is 1.2532. The 1.18-1.20 range is now the most popular price interval, having 16% of the votes, while on the second place are the 1.20-1.22, 1.26-1.28 and the 1.28-1.30 price ranges, with 14% of poll participants choosing each of them. Furthermore, the 1.30-1.32 interval was selected by 11% of the voters.