GBP/USD looks to PMI data
GBP/USD fell 0.4% in the previous session, its third straight day of decline and is stabilizing today.
US Dollar strength hit the pair after Jerome Powell was re-nominated as Fed Chair. Following the announcement Fed interest hike bets ramped up, with Powell expected to adopt a more aggressive approach to monetary policy.
Ongoing Brexit disagreements over the Northern Ireland protocol in addition to rising COBID cases have dragged on the pound.
Attention now swings to PMI data from both the UK and the US. The UK composite PMI is expected to edge mildly lower to 57.5 in November from 57.8.
The US services and manufacturing PMIs are expected to rise to 59 from 58.7 and 58.4 respectively.Learn more about the pound
Where next for GBP/USD?
GBP/USD faced rejection at the falling trend line and is extending its decline back below the 50 sma. This combined with the bearish MACD points to further losses. Sellers will be looking for a move below 1.3880 today’s low in order to test 1.3340 November’s low and 1.33 round number.
Meanwhile, any recovery would need to retake the 50 sma at 1.3430 to expose the falling trendline support. It would take a move over 1.35 the 100 sma and last week’s high for the bias to change to bullish and 1.36 to come into target.
DAX breaks below support, PMIs next
The DAX is slumping lower on Tuesday as investors look ahead to the release of the latest PMI data, which should provide fresh insight as to the health of the German economy.
Expectations are for business activity to slowed in Germany in November to 51 down from 52. The level 50 separates expansion from contraction.
This could suggest that economy growth in the Eurozone’s largest economy is stalling as inflation surges and covid cases reach record levels.
Austria went into lockdown on Monday, fears are growing that Germany could follow suit.Learn more about the DA/market-analysis/latest-research/dax-30-trading-guide/
Where next for the German DAX?
The DAX has broken below its rising trendline support dating back to early October. The breaking down of support at 16000 the round number and late August high, plus the bearish crossover on the MACD are keeping sellers optimistic of further losses.
Sellers could now target 15790 the mid-September high ahead of 15670 the 100 sma.
Meanwhile buyers will look for a move back over 16000 to target 16285 and fresh all time highs.
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