Cable pulled back from new one-month high on Monday, as traders collected profits from rally in past three days.
Overbought daily studies contributed to decision, though investors exited longs ahead of key events this week – UK jobs/earnings and US CPI data on Tuesday and Fed rate decision on Wednesday, which are expected to generate fresh direction signals.
Economists expect US annualized inflation to fall to 4.1% in May, from 4.9% in April, while core inflation is expected to drop to 5.3% in May from 5.5% previous month, which will add to broad expectations of the Fed staying on hold in June policy meeting.
This would add to scenario that current pullback is just positioning for fresh push higher on dovish Fed.
Fresh easing should ideally find ground around strong supports at 1.2493 (top of rising daily cloud / daily Kijun-sen / broken Fibo 50% of 1.2679/1.2307) to keep larger bulls intact.
Caution on penetration of thick daily cloud and violation of daily Tenkan-sen (1.2473) which would open way for deeper pullback.
Res: 1.2537; 1.2599; 1.2640; 1.2679.
Sup: 1.2493; 1.2473; 1.2450; 1.2395.