Euro And Pound With A Tailwind
MaiMarFX | Jun 01, 2017 06:06AM ET
The pound sterling continued to be very volatile on increased sensitivity to polls ahead of next week's U.K. vote. While separate polls paint a mixed picture the pound reacts sensitively to every single projection, leading to higher volatility. We bear in mind that opinion polls are not giving us the true picture about the final result; conflicting projections suggest, at best, that there is a significant degree of uncertainty. As a trader, we should not get confused by the conflicting polls; instead, we should focus on what we see in the chart and rely on the volatility levels. A moderate degree of volatility provides the foundation for a profitable performance. We thus generated a good profit yesterday by buying pounds towards 1.29, reaching our profit target of 70 pips.
GBP/USD
After touching 1.2769, the lowest level since April 21, sterling has surged by 1.5 % to a high of 1.2921. Given the fact that the cable's current price action is dominated by the most recent polls, it is difficult to predict how high or low the pair might go. Nonetheless, we will take a brief look at the current technical picture.
The 1.2770-50 support proved to be intact, while a short-term resistance is seen at 1.2980. If the pound is unable to break above 1.30, it could head for a test of 1.2750, the lower barrier of the current downward channel. Breakout traders should pay attention to price swings above 1.3050 or, on the other side, below 1.2740.
U.K. PMI Manufacturing is due for release at 8:30 UTC.
EUR/USD
The euro climbed towards 1.1260 despite softer euro-zone inflation data. As to the question of how high the euro might go, we focus on higher hurdles at 1.13 and 1.1330 from where pullbacks are becoming more likely. Technically, we bear in mind that the currency pair approaches overbought territory. Traders should therefore anticipate near-term corrections.
Tomorrow's U.S. jobs report may bolster the case for an imminent rate hike; the U.S. dollar could therefore react very sensitive to a better-than-expected jobs report. Today's ADP report scheduled for release at 12:15 UTC followed by ISM Manufacturing (14:00 UTC) may provide a foretaste of tomorrow's NFP data.
Get The News You Want
Here are our daily signal alerts:
EUR/USD
Long at 1.1260 SL 25 TP 40, 70
Short at 1.1230 SL 25 TP 18, 38
GBP/USD
Long at 1.2890 SL 25 TP 40-50
Short at 1.2840 SL 25 TP 17, 40
We wish you good trades and many pips!
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