US political situation does not give investors a chance to relax. The meeting between US President Barack Obama and members of Congress did not take place and the country has been without a government for the second week. Senate discusses a draft of temporary raise of the public debt ceiling until mid-February. Meanwhile, the time of technical default, which is 17 October, is approaching. There is still a hope that president Obama will increase the ceiling of public debt by his own resolution without Congress’ consent. In such case government bonds with full coupon will be issued. The American dollar is likely to weaken in the next few weeks, which will be followed by further growth.
Economic calendar is eventful today. Some UK news will be released, including the data on monthly producer price index and annual index of consumer price. It is also expected that President of the US Fed in New York, William Dudley will give a speech today. William Dudley is a also vice-chairman of the Monetary Policy Committee with the voting power in making interest rate decisions.
Support and resistance
Indicators do not give strong signals of trend reversal. MACD histogram is in the oversold zone and its volumes are decreasing. It is likely that the signal line will cross the zero line soon and will form a buy signal. Moving average line of “Bollinger bands” indicator is directed upward, confirming ascending trend in the pair. Ichimoku Kinko Hyo indicator will give a buy signal as soon as Tenkan-Sen crosses Kijun-Sen from bottom to top.
Key support levels are 1.5926, 1.5967 and 1.5990. Resistance level is at the lower limit of Ichimoku cloud: 1.6032.
As a trading strategy it is recommended to open long positions at the current price with profit taking at the level of 1.6032 and stop-loss at the level of 1.5967.
Analyst of LiteForex Group of Companies