It was an odd day in North American trade that saw a variety of trading instruments perform daring feats of acrobatics as they jumped, fell, and sometimes did both before the day was through. US equity markets were some of the most egregious offenders as the Dow was down over 200 points in late trade only to rally back up to finish down only 195, or around 1%. The S&P 500 didn’t fare much better by falling 1% as well, however, the typically correlated USD/JPY didn’t fall at all; it rose up close to 150 pips and challenged the psychologically daunting 120 level before retreating late. Other than the USD/JPY, the dollar didn’t fare too well and got kicked around by the other major currencies including the EUR, CHF, and CAD.
One currency that has had a lot of success against the USD lately is the GBP. While that wasn’t really the case today as the two currencies battled it out on both sides, it’d be surprising to see much more GBP strength from here. The nearly 950 pip rally that this pair has witnessed since the 12th of April has been surprising to say the least, particularly if you consider the uncertain nature of the UK elections coming up next week. Uncertainty tends to drive investors away, and the GBP/USD may be ripe for deliverance even though the USD hasn’t been getting many pats on the back lately.
Along with the near millennial rally for the GBP/USD, it has been following a pretty strong and resourceful uptrend. If this pair was to break through this trend line, it may signal the end of it and a strong retracement may be in order. If this were to retrace along Fibonacci lines, the 50% retracement near 0.5030 or the 61.8% retracement near 1.4920 look intriguing as they also line up with previous support/resistance points. Beware though that political uncertainty could move this pair even more than usual and has the potential to erase all of the gains this pair has enjoyed over the past three weeks.
Figure 1:
Source: www.forex.com
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.