Recovery lacks momentum to resume; US inflation data eyed for fresh signals
Cable stands at the front foot in early Wednesday’s trading, following Tuesday’s 0.53% bounce which formed reversal pattern on daily chart.
Recovery attempts were so far limited and lacking strength to extend above pivots at 1.3910/36 (10/20 DMA’s which formed bear-cross on Tuesday) to generate further reversal signals.
Daily techs are mixed as rising bearish momentum conflicts positive signal from north-heading stochastic (which also showed bullish divergence) and traders focus on US CPI data, due later today, for fresh signals.
US inflation is expected to rise by 1.7% in Feb, from 1.4% in Jan and release above forecast would inflate dollar and increase pressure on sterling.
Stronger direction signals could be expected on violation of 20DMA (bullish) that would open way for retest of pivotal 1.40 resistance zone.
Conversely, break of1.3778 (last Friday’s low) would risk extension of pullback from 1.4238 peak towards strong supports at1.3642 (Fibo 38.2% of 1.2675/1.4238 / top of rising daily Ichimoku cloud).
Res: 1.3910; 1.3936; 1.3953; 1.4000
Sup: 1.3863; 1.3845; 1.3800; 1.3778