Note the 10-yr treasury yield is trading around 1.9%. Oil is on a front foot as well and showing no signs of weakness. Hence, a strong durable goods report could send 10-yr yield closer to 2% and strengthen USD across the board. In such a case, Cable could re-test inverse head and shoulder neckline support at 1.4385 levels, although markets have trimmed Brexit bets and thus fresh demand for Sterling could be anticipated near 1.4385-1. 44 levels.
On the other hand, a dismal durable goods orders release could see Cable make a run at 1.4578 -1.46 levels.
- Technicals – watch out for a failure at 1.4533
Cable’s inverse head and shoulder breakout coupled with daily and hourly indicates ample scope for a further upside in the pair from the current level of 1.4530.
- However, area around 1.4533-1.4578 has acted as a strong resistance since early Feb, hence bulls should observe caution as failure to take out or sustain above 1.4533 could trigger a minor drop to 1.4459-1.4436, under which neckline at 1.4386 stands exposed.
- On the higher side, intraday break above 1.4578 could yield 1.4617, although rise should be viewed with caution.