The economic calendar was almost empty last Friday. The only important event was the publication of the United Kingdom's volume of retail sales, whose decline was expected to slow down from -5.9% to -3.8% (y/y). Nevertheless, the data came out at -3.7%, which was slightly better than the forecast. As a result, this locally supported the pound in the market.
As for Europe and the United States, particularly important statistics were not released on March 26.
The empty economic calendar affected the dynamics in the market, which were very low. Moreover, traders did not observe any drastic changes when analyzing the DXY chart, as if market participants had taken a break.
It is worth considering that the DXY has already set an upward path, which is confirmed by the breakdown of the local high of 92.50. If the set mood does not fade, it is quite possible that the index will rise to the area of 94.00/94.50 within a few trading weeks.
We should note that the U.S Dollar Index (DXY) is the ratio of the US dollar (USD) to a basket of six currencies and is a weighted average of the dollar against the euro (EUR), Japanese yen (JPY), pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF).
In this case, the growth of the DXY index leads to the strengthening of the US dollar against its competitors.
As for traditional currency pairs, there is a characteristic restraint, which is reflected through stagnation or slight changes in the price.
Looking at the EUR/USD pair trading chart, it can be seen that there is a sharp decline from the high (1.2349) of the mid-term trend, where the price coordinate of 1.1761 acted as a pivot change. The scale of the euro's weakening since this year began is 4.73%, which is about 580 points. However, considering the scale of the mid-term upward trend, sellers still have a chance to further move downwards.
It can be noted that the variable support point of 1.1761, relative to which the stagnation occurred, did not become an impulse for the buyers' activity. It only affected the market with a local price fluctuation within 30 points, which indicates that the downward interest in the market is maintained.
In turn, the GBP/USD pair, which was already moving along the pullback course from the variable support point of 1.3670, managed to slightly extend the upward course last Friday to the level of 1.3810, but the potential of buyers was already worn out. In fact, there was a slowdown, which led to a rise in the volume of their short positions (sell positions).
It should be recalled that the current quote is moving in the direction of the correctional move from the high of the mid-term trend 1.4224 ---> 1.3669.
Trading recommendation for EUR/USD and GBP/USD on March 29
Today, the UK will release its lending market data, where everything is not as great as most of the buyers of the pound desire.
The volume of mortgage lending for February is expected to decline from 5.17 billion pounds to 5.00 billion pounds, followed by the number of approved mortgage loans, which is also expected to fall from 98.99 thousand to 95.00 thousand. In turn, the volume of consumer lending is lowered by 1.250 billion pounds for February.
Due to such depressing indicators, the pound may further decline.
8:30 Universal time - UK lending market
Meanwhile, Europe and the US will not publish anything interesting again today.
If we analyze the EUR/USD trading chart, it shows that the quote's amplitude fluctuation is in the range of 1.1760/1.1805. Such a narrow range may become a cumulative basis for speculators, which will result in a sharp surge in activity.
Considering the main downward trend, breaking through the lower border of 1.1760 is considered an actual tactic, which will lead to the prolongation of the correction from the high of the mid-term trend.
Alternatively, traders can consider the method of breaking through a particular border of the current accumulation of 1.1760/1.1805, but it should be noted that while this method is considered, we are talking only about a local surge in activity. Therefore, one's trading operations should have a short-term perspective.
As for the trading chart of GBP/USD pair, it can be seen that there was an attempt to decline during the Asian session, but market participants failed to hold the quote below the level of 1.3750.
To confirm the signal to sell, it is necessary for the quote to hold below the level of 1.3750 in the H4 time frame, which will open the path towards 1.3670.
