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12 November Forex daily review

Sergiy Zlyvko
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In European trading the U.S. dollar continued to strengthen its position against major currencies and accelerated on the news from Britain against the pound. GBPUSD rate in the European session lost over 100 points, of which the loss due the inflation data was about 60 points.

October data showed an inflation slowdown in the UK. The consumer price index for October was 0.1% versus 0.4% in September and 0.4% forecast. The annual prevalence was 2.2% compared with 2.7% and 2.5% forecast. The retail price index in the UK in October has not changed. The forecast was 0.4%. The annual prevalence of 2.6% compared with 3.2% of the previous value. Purchasing and selling price indices also went below the forecast.

Statistics were lower than predicted values than dumping of the British currency was provoked in cross-pairs. GBPUSD rate broke through key support 1.5895 and fell to 1.5855. By a sharp decrease to a minimum 1.5855, the pound vendors opened two targets: 1.5750 and 1.5560. The euro/dollar from 1.3360 low with the support of cross-rate EURGBP rebounded by 25 points, to 1.3385.

The overall picture of the market does not inspire confidence for continued growth of the dollar. Crosses have turned away from the pound and support other currencies. Either flat drags until Wednesday or key pairs will follow the pound.

On Tuesday, foreign exchange market trading resulted in different directions. The U.S. dollar strengthened against the end of the day, and the British pound has weakened against the single currency. The dollar index after the test of 81.40 level back to 81.10 line. 81.05 level acts as a support. The situation remains uncertain, the picture is mixed. Stochastic is below, CCI is about 100.

We suppose that with the opening of the European session, the dollar will decline slightly and closer to the closure of the Asian session, we are waiting for its growth starting.

The euro/dollar after falling to 1.3360 recovered to the level of 1.3445. In Asia, the euro is trading at 1.3445. Eurobulls are supported by the growth of EURGBP cross-rate, which has appreciated sharply after the publication of the inflation data for Britain. On Wednesday, we assume that EURUSD will rebound to 1.3470 and from this level will new sales of the euro will begin. Also because of the long-lasting correction there are risks of breakdown of 1.3455 level. In this case, the euro will block Thursday’s fall.

At closing of the trading day, the U.S. dollar strengthened against the British pound. Decline of the pound accelerated on the news from Britain. October data showed a slowdown in inflation in the UK. GBPUSD rate broke through the key support 1.5895 and fell to 1.5855. By the close of the European session, the pair rebounded to 1.5945.

In Asia, the pound is trading at 1.5888. At the present time, 1.5855 level acts as a support. The way is opened to 1.5590. We would like to see a pullback to 1.5890 level. At 9:30 GMT the data on the labor market in the UK will be published. If data will be very different from the forecast, there may be sharp fluctuations. From this day we forward a contraction, the euro/dollar decline and the pound/dollar slight recovery.

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