Cable remains at the back foot on Monday, but with limited extension of Friday’s nearly 0.9% drop so far, though dollar keeps positive tone on growing expectations of another Fed rate hike in May.
Much better than expected release of US Empire State Manufacturing Index (Apr 10.8 vs -18.00 f/c) added support to the greenback.
Rising 20DMA (1.2375) and Fibo 23.6% of 1.0802/1.2545 (1.2370) offered temporary support, but near-term risk remains shifted to the downside and threatening break of pivotal supports at 1.2375/70 and 1.2343 (Apr 10 trough).
Sustained break here to generate fresh bearish signal on completion of a double-top pattern (1.2525/45) and risk deeper fall.
Weakening daily studies contribute to the outlook as falling 14-d momentum is approaching the borderline of negative territory and stochastic is heading south, while MA’s are in mixed setup.
Loss of 1.2343 pivot would risk acceleration towards 1.2262 (Fibo 38.2% of 1.0802/1.2545) and 1.2180 zone (50% retracement/converged 55/100DMA’s) in extension.
Near-term action is expected to remain biased lower while holding below 10DMA (1.2443), but extended range-trading can be expected if bears fail to clear supports at 1.2375/70.
Res: 1.2443; 1.2476; 1.2500; 1.2545.
Sup: 1.2343; 1.2262; 1.2190; 1.2174.
