By Fast Brokers – The Cable is stabilizing above Friday’s lows after the risk trade got hit by news that Fitch is downgrading Spain’s debt. However, as with the EUR/USD, losses in the Cable were limited and the currency pair is still comfortable above previous May lows. Hence, it seems investors are making an effort to establish a base despite the continuous negative news flow. 1.45 appears to be a key level at the moment and the Cable may need a meaningful positive psychological event in order to break free to the topside. Meanwhile, negative psychological headwinds remain and the road to the topside is riddled with challenges. Therefore, investors should keep an active eye on the news wire. The data wire will pick back up tomorrow with the release of China’s manufacturing PMI followed by key Australian data and an RBA rate decision. Later the UK will print its own manufacturing PMI and the Halifax HPI is tentative. Hence, despite today’s stability we can expect activity to pick up as the trading week progresses.
Technically speaking, the Cable faces multiple downtrend lines along with intraday and 5/28 highs. Additionally, the psychological 1.45 area could continue to serve as a solid barrier over the near-term. As for the downside, the Cable has support in the form of intraday and 5/20 lows. Furthermore, the psychological 1.42 level could serve as a technical cushion if it’s reached.
Present Price: 1.4477
Resistances: 1.4498, 1.4521, 1.4543, 1.4584, 1.4626, 1.4671
Supports: 1.4432, 1.4409, 1.4387, 1.4359, 1.4326, 1.4301
Psychological: 1.42, 1.45, May 2010 and February 2009 lows
(click chart to enlarge)
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