Intraday Analysis – GBP seeks support
Cable fell after the UK’s inflation slowed down to its lowest pace in two years. The recent high of 1.2430 was a support-turned-resistance from the daily chart and a surge above this ceiling might have opened the door to a meaningful rebound. The supply area 1.2500-1.2550 is the next threshold before the bulls may reclaim more control. In the meantime, the rally may need some breathing room in the short-term and a pullback could be seen as an opportunity to stake in. 1.2350 is the closest support to expect follow-through buying.
The Japanese yen struggled as the GDP showed a larger-than-expected contraction in the third quarter. So far it seems that the buy side is having a hard time lifting offers at last year’s peak of 151.90. A steep drop below 150.80 has stirred up volatility once again by triggering a liquidation of leveraged short-term bets. However, 150.20 saw renewed buying interests and a bullish breakout would lead to an extended rally. Further down, the double bottom at 149.20 is an important daily support level in case of a consolidation.
Cooling inflation across the scene boosts demand for equities. The Dax 40’s decisive break above October’s high of 15550 has put the buyers back in the game with a solid footing. The previous swing high of 15990 near the psychological level of 16000 is the next resistance standing in the way of a bullish continuation in the medium-term. As the RSI drops back into the neutral area, a limited retreat might be due to let the bulls regroup in anticipation of a new round of rally. The former supply zone 15500 has turned into a support.