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GBP/USD Retail Crowd Turns Net-Long Ahead of BoE Minutes

GBP/USD Retail Crowd Turns Net-Long Ahead of BoE Minutes

David Song, Strategist

Talking Points:

- GBP/USD Retail Crowd Flips Net-Long Following Dismal U.K. CPI Report.

- EUR/USD Fails to Retain Bullish Structure as ECB Reinforces Dovish Forward-Guidance.

- USDOLLAR Downside Targets Remain Favored on Bearish Formation, Dismal Data.

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GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • GBP/USD remains at risk for a further pullback following the failed attempts to close above 1.5780 (38.2% retracement), while the pair continues to carve a series of lower highs & lows this week.
  • Despite the unexpected slowdown in the U.K. Consumer Price Index (CPI), Bank of England (BoE) Governor Mark Carney anticipates to see stronger price growth towards the end of the year; will stay constructive on GBP/USD as long as the Relative Strength Index (RSI) preserves the bullish momentum carried over from March.
  • BoE Minutes are widely expected to show a unanimous vote, but the DailyFX Speculative Sentiment Index (SSI) shows retail crowd flipped net-long GBP/USD following the dismal inflation print, with the ratio currently standing at +1.12.

EUR/USD

EUR/USD Daily Chart
  • EUR/USD faces a greater risk of carving a near-term top in May following the failed attempted to test the February high (1.1532), while price & RSI struggle to retain the bullish formations.
  • Dovish rhetoric from European Central Bank’s (ECB) Benoit Coeure & Christian Noyer encourages a long-term bearish outlook for the single currency as the Governing Council retains a highly dovish tone for monetary policy.
  • Break/close below 1.1120 (61.8% retracement) may open up former resistance around 1.0970 (38.2% expansion) to 1.0990 (50% retracement).

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Price & Time: The Curious Case of USD/JPY

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11804.79

11820.52

11719.38

0.65

139.72%

GBP/USD Retail Crowd Turns Net-Long Ahead of BoE MinutesUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar looks poised for a further advance as it breaks out of the downward trending channel; Federal Open Market Committee (FOMC) Minutes may set the tone ahead of the Consumer Price Index (CPI) as market participants weigh the outlook for monetary policy.
  • Marked expansion in Housing Starts & Building Permits may align with Fed expectations and highlight a stronger recovery for the second-quarter.
  • Waiting for a push above the Fibonacci overlap around 11,826 (61.8% expansion) to 11.843 (38.2% retracement) to reinforce a bullish outlook for the dollar.

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GBP/USD Retail Crowd Turns Net-Long Ahead of BoE Minutes

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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