With the pound reversing course and falling from its recent highs, all eyes are on its future direction

With the pound reversing course and falling from its recent highs, all eyes are on its direction

05.04.2023

In the U.S. currency market yesterday, the U.S. dollar fell against the euro as a series of economic indicators fell short of market expectations. The EUR/USD pair rose from 1.0882 to 1.0973. It has broken through last month’s high and is climbing 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 run, so we will need to watch the situation carefully to see if the upward trend continues for a while.

European currencies saw the pound, which had been rising against the yen, reverse course after Bank of England MPC member Tenreyro stated, “Interest rates are reaching 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’s schedule includes German manufacturing orders at 3:00 PM, French industrial production and the French manufacturing production index at 3:45 PM, the French services PMI at 4:50 PM, the German services PMI at 4:55 PM, the Eurozone services PMI at 5:00 PM, the UK services PMI at 5:30 PM, and at 6:15 PM, a statement by a member of the Bank of Japan’s Monetary Policy Committee, followed by the U.S. MBA mortgage applications index at 8:00 PM, the U.S. ADP employment report at 9:15 PM, and the Canadian trade balance at 9:30 PM.remarks by MPC member Tenreyro, at 8:00 PM the U.S. MBA Mortgage Applications Index, at 9:15 PM the U.S. ADP Employment Report, at 9:30 PM Canada’s trade balance and the U.S. trade balance, at 10:45 PM the U.S. Services PMI, at 11:00 PM the U.S. ISM Non-Manufacturing PMI, and at 11:30 PM U.S. weekly crude oil inventories.We will be closely watching the direction of the pound, which has reversed course and is falling from its recent highs.