- The British pound has rallied initially during the trading session on Thursday to break above the 1.31 level, but it looks like we are giving back some of the gains.
- That's interesting considering that the 1.31 level is a major resistance region on the weekly chart, so it does make a certain amount of sense.
- You also have to keep in mind that the last several days have been basically straight up in the air, so sooner or later people are going to want to take a bit of profit.
The question now is whether or not we will get a significant pullback. If we do, there are a couple of levels that I'll be watching for potential support. The first one, of course, is the 1.30 level, as it is a large, round, psychologically significant figure, but after that we have the 1.2850 level that's been important multiple times in the past. Furthermore, we have the 50-day EMA hanging around the 1.2850 level, so it all ties together quite nicely.
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Is the USD Selling Done?
This could be the end of the US dollar selling. We'll just have to wait and see. I think a lot of that comes down to what Jerome Powell says on Friday. He has a big speech, and if he sounds overly hawkish or maybe not so sure about being dovish, that's going to cause chaos in the market yet again. That will almost certainly send the US dollar higher in value. And that, of course, would be felt over here. On the other hand, if he sounds somewhat dovish or we get some other risk on move.
A break above the 1.3150 level probably kicks off the next leg higher. Regardless, we are a little overdone, so I think a pullback is probably the most likely outcome here, as the market had gotten way too far ahead of itself as it seems to be prone to do these days. All things being equal, keep in mind, it's a very volatile situation out there, so you do not want to have a huge position on whatever you choose to do.
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