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18/02/2014: Trading outlook for today

The lower than expected UK CPI will put downside pressure on Cable. The chart is now building up for a correction with yesterday’s shooting star candlestick and the weakness early today. A move back towards $1.6600 could easily be seen now. I am looking for the failure of any rally as a chance to sell now.

With the euro remaining firm against the dollar, this ties in with our outlook that EUR/GBP could be set to rally back towards £0.8280/£0.8300.

German ZEW Economic Sentiment is expected to sustain the rise to 61.7 and hitting this mark would further support the euro. In this case expect EUR/USD to challenge the $1.3739 resistance.

Dollar/Yen rally failed under the 102.83 key resistance and this is a concern for the dollar bulls. With what should be a dovish set of FOMC meeting minutes tomorrow, if the dollar cannot rally through 102.83 then the corrective pressure will be rising once more.

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