Bulls take a breather, awaiting Fed/BOE and UK CPI data
Cable is a tad lower in early Europe on Tuesday, as bulls are taking a breather after strong rally in past three days, which hit the highest since Feb 2.
Overall picture remains bullish, with easing of fears about crisis in banking sector, cautiously reviving risk appetite, however, concerns about the stability of US financial system persist.
Markets focus on UK inflation data on Wednesday and BOE rate decision on Thursday for fresh signals.
UK inflation is expected to ease to 9.9% in February from 10.1% in January, while the Bank of England is likely to raise interest rate by 25 basis points to 4.25%, new highest since 2008.
Fed policy decision on Wednesday will be also closely watched, with wide expectations for 25 basis points hike, though with speculations that the Fed may keep rates unchanged, due to developing crisis in banking sector.
Overbought conditions on daily chart support the notion of consolidation / shallow pullback, as bullish momentum remains strong and moving averages are in bullish setup.
Dips should find solid support at 1.2200 zone (broken Fibo 61.8% of 1.2447/1.1802 / former tops of Mar 13,14), guarding 1.2130 zone (broken 50% retracement / 55DMA).
Caution on break below 1.2100 (rising 10DMA / Fibo 38.2% of 1.0802/1.2284) which would weaken near-term structure and open way for deeper pullback.
Res: 1.2295; 1.2344; 1.2402; 1.2446
Sup: 1.2200; 1.2130; 1.2100; 1.2045