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The GBP/USD pair seeks to stabilise above 1,3350, while the US dollar remains weak against a giant basket of coins after the Fed’s resolution of aiming for an average inflation of 2%.
The US dollar index stabilized below 92.50 and attempted to fall below annual lows close to 92.10; if the US dollar index manages to fall below 92.10, it will gain more downward momentum, which would be bullish for the GBP/USD pair.
The main challenge for the US dollar is that some investors have to position themselves during years of low interest rates in the United States. Inevitably, this perspective leads to increased pressure on the US currency.
In addition, the market looks ready to price in an increased probability of higher inflation, judging by the recent action in U.S. government bonds. The yields on 30-year U.S. government bonds have increased to 1.50%, a level not seen from June.
At this stage, the basic scenario remains favorable for the continuation of the existing gbP/USD upward movement. In the absence of vital economic reports expected to be published today, the dynamics of the GBP/USD industry will depend basically on market sentiment.
The GBP/USD controlled to overcome the resistance at 1,3270 and developed an additional bullish dynamic. There are no degrees between 1.3270 and the next resistance at 1.3425, so the GBP/USD can temporarily pass the check of 1.3425 in case the proper catalysts arise.
The RSI is in moderate degrees, so there is plenty of room to further expand the upward impulse. I note that more degrees of resistance can develop between 1,3270 and 1,3425, especially if the US dollar index is trying to recover from existing lows.
If the GBP/USD manages to position itself above the resistance at 1.3425, it will move towards the next resistance at 1.3515.The last time gbP/USD visited this territory in December 2019.
On the other hand, the past resistance point of 1.3270 will probably serve as the first hardware point for the GBP/USD pair. If the GBP/USD goes below this Array point, it will move to the next at 20 EMA at 1.3165.
For a review of all of today’s economic events, check out our economic calendar.
This article was originally published on FX Empire
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