The Forex market was less influenced by the selloff in equities at the beginning of this week. While the recent crash and subsequent recovery in equities have sparked a wave of volatility in global markets, the moves in forex have been more conservative.
The EUR/USD remained resilient and ended the trading day virtually unchanged after bouncing off near the 1.2310/00-support level. As long as the euro trades between 1.25 and 1.23 there is nothing new to report.
The GBP/USD dropped amid heightened volatility towards 1.3830 from where a relief rally started, erasing earlier losses with a rebound towards 1.40. At the end of the day, the pound ended the trading unchanged against the dollar. Traders should now prepare for larger swings with Brexit talks and Super Thursday looming.
Looking at the daily chart we see that bearish momentum is fading after the pound stopped its fall above 1.3830. While we expected lower targets to be at 1.3830 and 1.38, we now prepare for potential pullbacks. If the pound climbs back above 1.40 and is able to stabilize above that threshold, we anticipate further bullish momentum towards 1.42 and possibly even a break above 1.43. That bullish scenario is however not a foregone conclusion as sellers may re-emerge.
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