The Forex Market: The trading week opened with a major gap to the upside, almost 70 pips higher than it closed Friday but for almost the entire day, price moved in a pretty tight range. The Euro Zone CPI came out with a value of 1.3%, as anticipated and the event did not create strong moves.
Technical Outlook
Statistically weekly price gaps on this pair tend to be closed so we anticipate price to touch 1.3300 again because the gap originated near that area. Although gaps are usually closed, how much time passes until that happens is unknown so trading cannot be based on this information alone. However, 1.3400 was “threatened” today and this generated the move to the south so the distance to close the gap might be traveled today. The first level of interest is 1.3325, followed by 1.3300.
Fundamental Outlook
The most important data released today by the Euro Zone is the German ZEW Economic Sentiment which is expected to increase from the previous 42.0 to 45.3. Better numbers than anticipated will most likely strengthen the Euro and drive the pair higher; the release is scheduled for 09:00 am GMT.
The US Consumer Price Index is released at 12:30 pm GMT and is expected to remain unchanged (0.2%). The indicator is closely watched by market participants because of its inflationary implications and under normal circumstances, higher than anticipated numbers strengthen the US Dollar, driving the pair lower.
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