Fed vice chair Stanley Fischer’s comments yesterday saw the greenback give up some ground to risk currencies, apart from the sterling. It’s almost as if cable has been working on a different set of fundamentals as the pair remains subdued. There has been a lot of confusion around UK policy in recent times as data has remained mixed and policy makers are uncertain of the next move in rates.
On the docket today we have UK CPI and PPI. At the same time, we have US February CPI, of which inflation remains a major talking point for both nations.
In terms of price action, the $1.5000 handle continues to cap the pair and there are two points of interest to look out for. Firstly, the 38.2% retracement of the drop from February highs to last week’s low comes in at $1.4986.
In that region we also have a downtrend resistance line, which has been in place since the February high of $1.5550. As a result, we could see the price action continue to be capped in that area. Until we see a daily close above $1.5000, I would continue to favour shorts on strength.