USD Comes Back with a BlastIndustrial production in Eurozone came worse than expectations. That was one of the reasons why EUR reversed sharply against the USD.
Other reasons were the main trend and the simultaneous strength of the American Dollar (higher CPI helped here). The price on Tuesday created a bullish engulfing but the price on Wednesday covered that entirely and created even bigger engulfing but this time a bearish one! We are back below the major supports with a strong sell signal. Everything seems clear now – that rise from Tuesday was just the normal price action movement, testing previous supports as new resistances.
Gold is showing the power of the false breakout pattern, this time, unfortunate for the buyers. At some point yesterday, the price was above the blue resistance. Buyers did not manage to hold the higher levels and price collapsed. The situation is pretty dangerous as we are now challenging the 1307 USD/oz support, which is absolutely crucial for the mid-term situation on Gold.
Now EURGBP. Yesterday we had important data for both currencies and for both of them the numbers were worse than expectations. With all this, the price decided to follow the technical analysis and broke the lower line of the flag pattern. That can be a false breakout though. Today, the EURGBP is going higher and trying to get back inside the flag. Once the price will make new weekly highs, we will have a denial of the negative sentiment and the way towards the highs from the end of the year will be open.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis