The U.S. dollar retreated in the last week, pushing the euro and British pound higher into overbought territory as a result. This week, traders will watch the FOMC minutes (Wednesday) and the Federal Reserve’s preferred gauge of inflation, the PCE index (Friday). These reports may revive some strength in the greenback but we bear in mind that the market’s greatest concern is a U.S. recession with markets pricing out some Fed tightening in 2023.
GBP/USD – Should bulls dream of 1.30?
Positive U.K. data and a weakening dollar have helped to push the cable higher but the zone between 1.26 and 1.2650 (green ellipse) could come in as a crucial resistance. Moreover, the pair entered overbought territory, making corrections toward 1.24 more likely now. However, should bulls make their way up to 1.26 and even be able to push the cable above 1.2650, then there is little in the way of resistance before 1.30 comes into play. On the downside, we expect the 1.24-area to serve as a support.
EUR/USD – Nothing new between 1.0650 and 1.0450
Euro bulls aim to break above 1.06 despite the current overbought situation. If 1.0610 finally breaks to the upside, gains might be extended toward 1.0640-50 but it’s only a question of time when the euro will have to correct some of its gains. A current support-area is seen between 1.05-1.0450.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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