to retest the first upside target at 106.55 (around yesterday's high).
Market Commentary :On Tuesday, US stock indices were mixed although the Dow Jones Industrial Average managed to extend its record-setting streak for the sixth consecutive sessions. Boosted by Johnson & Johnson's strong quarterly results and raised earnings guidance, the index added another 0.1% to 18,559, posting its eighth straight up day, the longest winning streak since March 2013.
On the other hand, the S&P 500 declined 0.1% to 2,163, and the Nasdaq Composite was down 0.4% to 5,036. Materials, retailing and energy shares were under pressure.
European stocks turned negative, with the STOXX Europe 600 losing 0.4%. Germany's DAX fell 0.8%, while the U.K.'s FTSE 100 was broadly flat.
US government bonds strengthened sending the benchmark 10-year Treasury yield down to 1.558% from 1.585% on Monday. Gold added 0.3% to $1,332 an ounce, and silver slid 0.6% to $19.89 giving a losing streak of four straight sessions. Meanwhile, Nymex crude oil fell 1.3% further to $44.65 a barrel.
On the economic front, the US government reported that June housing starts amounted to 1.19 million units (vs. 1.17 million units expected, 1.14 million units in May) and building permits rose 1.5% to 1.15 million units (as expected, vs. 1.14 million units in May). Germany's ZEW investor confidence index declined to 49.8 in June (vs. 51.8 expected) from 54.5 in May. The UK government reported that June CPI edged up 0.2% month on month (as expected) and increased 0.4% year on year (vs. +0.5% expected).
On forex trading, the US dollar strengthened across the board on the release of strong economic data in the US. The IMF slashed its growth forecast for the UK for 2016 to 1.7% from 1.9% previously, and that for 2017 to 1.3% from 2.2%, citing uncertainty over the country's vote to leave the European Union. The British pound then dropped 1.1% to 1.3110 against the US dollar.
Recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 106.55 and the second one, at 107.00. In the alternative scenario, short positions are recommended with the first target at 105.25, if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 104.60. The pivot point is at 105.60.
Resistance levels: 106.55, 107.00, 107.45
Support levels: 105.25, 104.60, 103.90
The material has been provided by InstaForex Company - www.instaforex.com