U.S. Update: Fear is still around

Market continues moving following risk sentiment, and despite a general tone of optimism is surging around the world, things are not clear enough to made traders feel comfortable with risky positions.

During the Asian session, the RBA cut interest rates to a 49-year low to 3.0% saying the economy is contracting, but at a slower pace than other major economies. Central bank also offered a more neutral policy stance and said there are tentative signs of improvement in the world economy, including in China, Australia's largest trading partner. The cut together with yesterday’s Wall Street fall, triggered a massive buying of dollars and yens, that returned to the table as safe havens.

During the European session, U.K. manufacturing extended the worst performance in February since 1980 as the global economic slump throttled demand for goods. Factory production dropped 0.9 percent from January, less than expected, but yet clearly negative. In the three months through February, output dropped 6.5 percent, the most since records began in 1968. Euro zone was not better: the final GDP for the Q-4 was revised down to -1.6% q/q from previous -1.5%, and to -1.5% y/y from previous -1.3%. Q-3 GDP decline was also revised down to -0.3% from previous -0.2%. Q-3 y/y putting extra pressure in Euro.

Wall Street fell and at this moment remains 165 points down. Despite that, European majors refuse to continue falling and Gbp gave a nice upside come back while Euro consolidates close to daily lows.

Gbp/Usd overview

The pair regains bullish strength during the American session, and quotes above the 1.4720 zone, turning indicators bullish. 20 SMA is acting as dynamic resistance, around 1.4765, and needs to be broken to confirm further upside movements in the pair, with next resistances for the next hours at 1.4812 and 1.4880 zone. Supports on the other hand will be at 1.4720 1.4685 and 1.4615 zone. The pair failed to break under the 38.2% retracement of the last daily up leg, confirming bullish bias. Actual candle close will be decidedly as daily charts are suggesting a reversal pattern.