INTERNATIONAL CURRENCY BUZZ
Forex- Dollar Backs Off 2018 Highs as Rally Pauses
Forex- EUR/USD could see gains extended to 1.2000/50
Forex- GBP/USD bulls challenge the 1.3600 handle as US Dollar retreats from highs
The correction lower in the buck remains well and sound on Wednesday and is now allowing EUR/USD to move closer to the 1.1900 handle, or session peaks. The pair is edging higher today following the renewed softer tone around the greenback. In fact, seems USD sellers have stepped in today in response to the strong rebound in the buck in recent weeks, which managed to retake the 93.00 handle and above, area last visited in December 2017. Adding to today’s offered bias in USD, US Producer Prices rose less than expected during April at an annualized 2.6% and 0.1% inter month. Core prices rose 0.2% on a monthly basis and 2.3% over the last twelve months. At the moment, the pair is gaining 0.10% at 1.1877 facing the next hurdle at 1.1984 (10 day sma) seconded 1.2018 (200 day sma) and finally 1.2153 (low Mar.1). On the downside, a break below 1.1823 (2018 low May 8) would open the door to 1.1768 (78.6% Fibo of November February up move) and finally 1.1718 (monthly low Dec.12 2017).
The GBP/USD is trading at around 1.3593 up 0.34% on Wednesday as investors are slowly unwinding their short GBP/USD positions ahead of the Bank of England rate decision and quarterly Inflation Report on Thursday. Cable bulls gathered some momentum and managed to orchestrate a counter trend move from the 1.3500 handle earlier in the European session to challenge the 1.3600 handle in the American session. The US dollar is trading lower on Wednesday below the 93.00 mark as investors are taking some profits off the table after US President Trump announced on Tuesday that he withdrew the US from the Iran nuclear deal. Adding pressure to the greenback is the worse than expected Producer Price Index (PPI) data. The PPI ex Food and Energy year on year to April came below expectations at 2.3% against 2.4% forecast by analysts. Technically, the GBP/USD is oversold and there is a combination of unwinding short positions and bottom pickers which is keeping the cable in the 1.3500 – 1.3600 range.