Fundamental
Overview
The USD regained some
ground in the final part of last week although we haven’t got any meaningful
catalyst for the move. Overall, we continue to range as the market is waiting
for something new for the next sustained trend. Given that the “short US dollar”
is now the most crowded trade, it will take something meaningful to lead the
market to expect more rate cuts than currently priced in.
On the GBP side, we got
some mixed data recently as the UK CPI surprised to the upside, while the UK
employment data came out weaker than expected. The market continues to see around
two rate cuts by the end of the year with a 87% chance of a 25 bps cut at the upcoming
meeting in August.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD is approaching once again the key support
around the 1.3368 level. This support might even be seen as the neckline of the
major head
and shoulders pattern. The buyers will likely step in around the support
with a defined risk below it to position for a rally into a new cycle high. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into the 1.3140 level next.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, there’s
not much we can glean from this timeframe as the price hasn’t reached the
support yet. We will need to zoom in to see some more details.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor downward trendline
defining the bearish momentum on this timeframe. From a risk management perspective,
the sellers will have a better risk to reward setup around the trendline and
the 1.3452 swing level to position for the break below the key support. The
buyers, on the other hand, will look for a break higher to pile in for a rally
into the 1.36 handle next. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the get US Job Openings and
Consumer Confidence data. On Wednesday, we have the US ADP, the US Q2 GDP and
the FOMC rate decision. On Thursday, we get the US PCE price index, the US
Jobless Claims and the US Employment Cost Index. Finally, on Friday, we
conclude the week with the US NFP report and the US ISM Manufacturing PMI.
This article was written by Giuseppe Dellamotta at investinglive.com.