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With the pound reversing course and falling from its recent highs, should we keep a close eye on its direction?

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With the pound reversing course and falling from its recent highs, should we keep a close eye on its direction?

05.04.2023

Today's Highlights
  1. France: Industrial Production
  2. U.S. ADP Employment Report

In the U.S. currency market the previous day, the U.S. dollar fell against the euro as a series of economic indicators fell short of market expectations. The euro/dollar pair rose from 1.0882 to 1.0973. It has broken through last month’s high and is rising at a pace that threatens to reach this year’s high.Although the 4-hour RSI for the EUR/USD pair is showing signs of divergence, the daily RSI still has room to rise, so we should wait and see cautiously to determine whether the upward trend will continue for a while.

European currencies saw the pound, which had been rising against the yen, reverse course after Tenreyro, a member of the Bank of England’s Monetary Policy Committee (MPC), stated, “Interest rates have reached high levels, and a more rapid reversal will be necessary.”GBP/JPY rose from 164.173 to 166.406 before reversing course. It fell below the 165-yen level and dipped below the 20-period moving average on the hourly chart. As GBP/JPY has reached the upper boundary of its 4-hour uptrend channel, a pullback is expected. Traders should watch for downside potential in the pound during European trading hours.

Today, at 15:00, German manufacturing orders; at 15:45, French industrial production and the French manufacturing production index; at 16:50, the French services PMI; at 16:55, the German services PMI; at 17:00, the Eurozone services PMI;at 5:30 PM, the UK Services PMI; at 6:15 PM, remarks by MPC member Tenreiro; at 8:00 PM, the US MBA Mortgage Applications Index; at 9:15 PM, the US ADP Employment Report; at 9:30 PM, Canada’s trade balance and the US trade balance;at 10:45 PM: U.S. Services PMI; at 11:00 PM: U.S. ISM Non-Manufacturing Index; and at 11:30 PM: U.S. weekly crude oil inventories. We will be closely monitoring the direction of the pound, which has reversed course and is falling after trading near its highs.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management with a particular focus on foreign exchange markets, and he also has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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