The euro climbed to a two-month high above $1.37 on Tuesday and looked poised to extend gains as momentum turned increasingly bullish after the currency’s recent break above key chart levels.
The GBPUSD nose-dived after a surprise 0.5 percent contraction in fourth-quarter UK gross domestic product, compared with economists’ forecasts of a 0.5 percent gain
The pound fell to a session low of around $1.5750. It last traded down 1 percent at $1.5830. Against the pound, the euro jumped almost 1.5 percent to its highest in two-and-a-half months
Trading Setups / Chart in Focus:
The GBPUSD lost about 170 pips today after Great Britain’s GPD for the last quarter of 2010 fell 0.5 percent; analysts expected a gain of 0.5 percent.
We can see in the chart below that price had previously shown rejection of resistance near 1.6050-1.6100 early last week. Support comes in near 1.5665, there is a good probability price will re-test this support in the near-term given today’s extremely bearish price action.
For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading education website.
On Wall Street today U.S. stocks climbed back from early session losses in what was a flurry of late-day buying to close the day little changed, optimism about earnings over-shadowed disappointing results from blue chips 3M and Johnson & Johnson.
The Dow lost 3.3 points, or 0.03 percent, the S&P 500 added 0.34 point, or 0.03 percent, and the Nasdaq gained 1.70 points, or 0.06 percent.
Upcoming important economic announcements: 1/26/2011
4:30am EST: Britain – MPC Meeting Minutes
10:00am EST: United States – New Home Sales
2:15pm EST: United States – FOMC Statement
2:15pm EST: United States – Federal Funds Rate
3:00pm EST: New Zealand – Official Cash Rate
3:00pm EST: New Zealand – RBNZ Rate Statement