Downward trading pattern is obvious in the longer term for the cable currency pair. Prices have dropped as low as 1.4951 in the recent trading and currently we see a rebound. The US dollar kept strengthening in January and the GBPUSD declined from resistance at 1.5617 to fresh low 1 ½ year low at 1.4951. Recent bounce up drove prices to the 50 period moving average at 1.5114 which is also at the 61.8% of the last bearish move from 1.5213 to 1.4951. Therefore we consider that as a medium to strong resistance.
We can also see the falling trend lines the daily and the H4 which adds to declining expectations. Moreover, we expect the UK preliminary GDP quarterly figure in a while expected at 0.6% for the 4th quarter of 2014, down from previous quarter number of 0.7%. Lower than that would support our bearish mood.
Looking at the oscillators, the Stochastic is in the overbought zone and the OsMA is at previous peaks line. In our opinion, should we see sluggish GDP data it is very likely that the previous bottom at 1.4953 would be revisited.
US Dollar Strengthens on FOMC, US Jobless Claims Ahead, Kiwi Slides
Yesterday evening the FOMC maintained the same language in its monetary policy and investors interpreted that the Fed remains on schedule to increase rates by the first half of 2015. Thus, any expectations for a possible delay in rate hike, were eliminated, as a consequence the US dollar was underpinned. In addition, the Fed said that the labor conditions improved further with strong job gains, which represent a better assessment by the Fed for employment sector compared to previous statements. A gauge measuring performance of the US dollar against its major counterparties bounced up from 93.95 to 94.78.
The Euro against the greenback declined from resistance at 1.1362 to support at 1.1262 after the FOMC announcement. With German preliminary CPI expected today and Greek political developments the EURUSD will be closely watched once again. The GBPUSD found a strong cap at 1.5213 and created a “failure swing” in the hourly timeframe increasing bearish considerations that is recognizable at the chart below. Currently the bearish bias prevails and we would expect lower ground achievable for today.
The NZDUSD continues its downward direction towards our previously set goal at 0.7254. The RBNZ said that considers more appropriate to maintain key rates steady at 3.5% for some time, changing from considering a lift-off of rates. That is a change in monetary stance to neutral which weighs on the currency pair. The Australian dollar was also weighed by stronger greenback with the AUDUSD falling from 0.7977 to 0.7827 overnight.
Later on today we would focus on the US Jobless Claims expected at 301K which would reveal further clues on the US employment sector, having in mind that next week we have the most leading indicator for the US labor, the Non-Farm Payrolls. Moreover, tonight we will closely monitor the Japanese Inflation and unemployment data.