GBP/USD: defends 1.2250-40 support for the time being, Yellen speech eyed

Rising expectations for interest-rate hike continued to bolster the greenback, lifting the key US Dollar Index to a two-month high on Thursday. The up-move was further supported by larger-than-expected drop in the US weekly jobless claims, which collapse to the lowest level in 44-years. The greenback, however, took a pause and eased a bit during Asian session on Friday as market participants now look forward to speeches from various Fed officials, including the Fed Chair Janet Yellen. Comments from policymakers would be looked upon for reinforcement of the central bank's hawkish stance and reaffirm possibilities of an eventual rate-hike action at its upcoming meeting on March 14-15. Apart from Fedspeaks, the release of US ISM non-manufacturing PMI would also be looked upon for some short-term trading impetus during early NA session.

GBP/USD

The GBP/USD pair dropped to fresh six week lows but managed to pull-back from lows and managed to defend 1.2250-40 support, nearing 61.8% Fibonacci retracement level of 1.1987-1.2706 recent up-move. The release of better-than-expected UK Construction PMI provided some intermediate support but persistent Brexit worries, coupled with broad based greenback strength, continued weighing on the major for the fifth consecutive session. Friday's UK economic docket features the release of Services PMI but is likely to have muted reaction on the major.

Technically, the pair seems to be oscillating within a short-term descending trend-channel formation on daily chart. Hence, a convincing break below 1.2250-40 support area is likely to accelerate the slide towards the channel support near 1.2210 region. Failure to defend channel support would mark a fresh break-down and trigger a fresh leg of near-term downslide, initially towards 1.2155-50 horizontal support and eventually towards 1.2040 support with some intermediate support at 1.2100 round figure mark.

On the upside, any recovery attempts might continue to face immediate resistance near 1.2300 handle, which if conquered might trigger a short-covering rally towards 1.2345 level, which could further get extended towards a strong support break-point, now turned important hurdle near 1.2380-85 zone.

EUR/USD

The preliminary release of Euro-zone inflation figures on Thursday, matching expectations, provided little respite for the Euro bulls and the pair broke below 1.0530-25 support area, marking 61.8% Fibonacci retracement level of 1.0341-1.0829 recovery witnessed during January.

With short-term technical indicators already in bearish territory, a follow through selling pressure below 1.0500 psychological mark would confirm yet another bearish break-down and open room for a fresh leg of downslide towards mid-1.0400s (Jan. 11 low) before the pair eventually drops to 1.0400-1.0390 support area.

On the upside, 1.0525-30 support break area should now act as immediate resistance and any further recovery above this immediate barrier should confront strong supply at an important resistance near 1.0550-55 horizontal area.