Risk aversion and UK data miss push sterling lower after four-day rally
Fresh risk aversion, combined with weaker than expected UK data, pushed sterling nearly 0.5% down in European trading on Wednesday.
Strong rebound in past four days lost steam at initial barrier at 1.3641 (Aug 20 low) and ahead of 1.3662 pivot (daily Kijun-sen / 50% retracement of 1.3912/1.3412 descend), with reversal pattern forming on daily chart and generating strong bearish signal.
Daily moving averages are again in full bearish configuration and momentum turned south, already deeply in the negative territory, while 100/200DMA’s are converging and about to form a bear-cross that would add to signs that short recovery might be over.
Fresh weakness sees a minimum requirement on daily close below 1.3575 (cracked Fibo 38.2% of 1.3411/1.3647 upleg) to confirm bearish stance.
Firm dollar amid growing concerns that surging energy prices could further boost inflation and prompt interest rate hike, add pressure on pound.
Traders focus on today’s US ADP private sector jobs data, often used as an indication for more significant NFP release Sep 473K f/c vs Aug 235K), due on Friday, which could further underpin US dollar on better than expected results.
Res: 1.3603; 1.3631; 1.3647; 1.3662
Sup: 1.3530; 1.3501; 1.3467; 1.3411