- The British pound saw a rise in trading on Thursday, approaching the significant 50-day EMA indicator.
- However, it has since given back some of those gains, suggesting the US dollar might regain some support.
- Looking at it this way, I can imagine a potential pullback, but it’s also clear that the GBP holds stronger against the US dollar than against many others. So, I think we should view this as a market trying to find its footing.
US dollar strength
Even if the US dollar experiences notable strength, it may still face challenges against the British pound due to the pound’s relative resilience compared to other currencies. In the long run, this pairing might break down, significantly impacting currencies like the euro and Canadian dollar.
Technical analysis
From a technical standpoint, the market appears somewhat stagnant, caught between the 50-day EMA and the 200-day EMA indicators. We’re currently at the 1.34 level, which is roughly in the middle of the consolidation range, bordered by 1.32 and 1.36. Being in the center of this range gives the impression that the market might be “close to fair value.”
Ultimately, the US dollar is contending with most other currencies, and I expect that scenario to persist. When the market is this volatile, fading signs of depletion might present a selling opportunity, but it’s wise to observe the USD against various other currencies to gauge its overall behavior. If we manage to surpass the 50-day EMA and possibly the 1.35 level, then sights could be set on 1.36.
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Christopher Lewis, with over two decades of experience in the financial markets, focuses on trading foreign exchange. He has regularly contributed to the Daily Forex website and writes for several online publications. His trading style leans toward the long-term, with trades typically lasting days or weeks.
