Forex Trading – Dovish Bank of England minutes force Sterling to 6 week low

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Today’s European session see’s the Euro experience some very choppy trading. The EURUSD pair opened up the session at 1.4264 and moved in a downward trend, dropping some 25+ pips as it moved with an oscillatory range of over 20 pips. The Euro has pared back on its earlier session’s gains as it met strong resistance around the current 55-day moving average of 1.4258. Support for the Euro, for day traders, is seen around its current trading level of 1.4230’s as it denotes the 23.6% Fibonacci retracement level of this week’s rise from Monday’s low of 1.4047 to yesterday’s peak of 1.4286. The current trading level of the single currency is still safely above its recently reached 7 week low as a boost in commodity prices helped draw support for the Euro.

The Sterling plummeted over 130 pips against the Dollar in today’s session, following a mixed UK employment report data and a bearish outlook from the Bank of England minutes that were released earlier today. The release of the minutes emphasized the growing uncertainty over Britain’s economic recovery as a 6-3 majority once again agreed that there was no need for an increase in the UK’s rates. The GBPUSD pair dropped from a session open of 1.6271 to a 6 week low of 1.6137 as the currency pair moved in a one way direction throughout the session.

Subsequent to the large decline in the Sterling, the EURGBP pair rose in today’s European session by some 50+ pips to a high of 0.8823 and moved convincingly above the 55-Day moving average which stands at a level of 0.8756. The unexpected increase in British unemployment rate for April along with the dovish outlook of the Bank of England minutes helped the Euro gain against the GBP in spite of the Euros drop against the Dollar. The release of the UK minutes helped the EURGBP pair momentarily break above previous resistance levels around the 0.8810’s and helped the pair temporarily move outside of the current range in which it is trading – as viewed from the 4 hour chart.

Limited news with regards to the Swiss Franc and USD saw the USDCHF pair move with limited volatility in today’s session as it traded around the 0.8805 level for most of the session, peaking around the end of the session with a high of 0.8822. The pair is currently supported around the 0.8786 level, with resistance at 0.8830’s – the 55 hour moving average as well as 0.8881 – yesterday’s peak.