A Weaker Dollar At A Time Like This?

faithmight

Yep! The week sure has started on an interesting note. Greece was downgraded to junk status today. Spanish banks are facing a possible bailout by the European Union today despite a supposedly successful auction last week. Germans are rioting against fiscal budget cuts and putting Merkel in the political hot seat as officials in her administration are resigning left and right. The US has not only an oil spill in the Gulf of Mexico to think about but another oil spill in Utah was reported yesterday. The World Cup is underway so nationalism is at an all-time high, and rightfully so. So with a geopolitical backdrop such as this, the USD is actually weaker?

Despite issues of its own, the Great British pound has managed to forge a bottom, so far, versus the US dollar as the markets pay closer to attention to developments in Europe and the US.

After the low at 1.4228, cable has managed to put in a bottom at that level. The $GBPUSD has slowly carved out an upward channel on the daily chart with higher lows and higher highs. With the daily chart still correcting the tremendous fall from 1.55, the pair favors more upside.

After making a new high at 1.48 in today’s session, cable has been unable to correct lower finding support at 1.4750/30. That is very bullish. Look for the pair to continue higher back towards yesterday’s highs as the USD continues to weaken. 1.4825 and 1.4862/75 are the next levels to watch to the upside.

There is a lot of news out in the coming session that could move cable in either direction. UK CPI is released this morning then US sees manufacturing numbers, consumer confidence, and TIC data. The $GBPUSD has not yet retraced last session’s move and remains quite bid. News may cause this pair to finish correcting so don’t get faked out. Watch the hourly Fibonacci levels for possible support and long opportunities or clues of renewed weakness. Be sure to trade what you see, not what I think.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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