The 200-day moving average comes into play once again
Sterling got a jolt from the customs union report earlier today and that has seen cable being the biggest gainer among the major bloc with the dollar being on the back foot in trading so far. But the upside move has so far fallen short of breaking the 200-day MA (blue line) @ 1.3560 and that will be a point of contention as we head into European trading.
Price is now retracing back towards the near-term moving averages on the hourly chart, with the 100 and 200-hour MAs sitting at 1.3536 and 1.3540 respectively. The confluence of the hourly moving averages will be a key level to eye as well since it will define the near-term bias in the pair. Stay above, and a bullish bias remains. Move below, and the pair is more likely to retest support at 1.3500 and the 10 May low @ 1.3460 (a level that has held in the last two days).
As for topside levels, the key will be to breach the 200-day MA @ 1.3560. After that will be another test against resistance at 1.3600.
Be wary of Brexit headline risks to come today - note that UK PM May is set to meet with EU's Tusk later on as well. The market is eagerly anticipating it, so that will provide for some fun and games in sterling as we close out the week.
------
