'Reasons for the Pound fall are real, pressure remains to the downside' - Yohay Elam, Forex Crunch

Jordi Martínez FXStreet

YOHAY ELAM
PROFILE
• Current Job: Analyst at Forex Crunch
• Career: Founded Forex Crunch. Has been in the FX markets since 2005. Speaker and host at FXStreet Live Video channel.

View profile at FXStreet

Yohay Elam has been into forex trading since 2005, and shares the experience and the knowledge that has accumulated. Like many forex traders, Elam has earned the significant share of knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always been of interest to him.

He founded Forex Crunch and is now one of the main speakers on our Live Video channel, hosting "Europe Live Market Open" every Wednesday from 7:00 to 8:00 GMT.

After Friday's flash crash, where's the GBPUSD headed in the upcoming weeks? What are the key levels for the pair?

The flash crash is a big event and the pound will need time to get used to the new levels. Volatility is expected to remain elevated for a few more weeks. The post-flash crash range of 1.2230 to 1.2485 is eyed. Further support below 1.2230 is at the round level of 1.20. On the topside, 1.26 should be eyed. All in all, the pressure remains to the downside. While the flash crash was related to a fat finger / low liquidity / cascading stop losses, the reasons for the fall are real.

How can individual traders protect themselves from this kind of brutal algo-triggered moves?

Low leverage is the key to safer trading. High leverage + high volatility = margin calls. Another tip is: trade with a trusted broker, regulated in a serious jurisdiction, that will make the best efforts to respect stop-loss points, even in extreme cases like the pound flash crash. Ones that chase their traders after negative equity are ones traders should stay away from.

And what is your take on FTSE strength? Is it all based on GBP weakness? Is it sustainable with all the Hard Brexit thoughts coming up?

There is a growing correlation between FTSE strength and the pound's weakness. In the FTSE 100, most companies rely on exports and on activities outside the UK. The FTSE 250 is already a more domestic-oriented index. All in all, UK stocks are reacting more to economic reality, the present, rather than future expectations. This is different from the pound. If the UK economy deteriorates as prospects of a hard Brexit hit hard, stocks will fall as well.

What fundamental is the main driver behind USD strength?

Monetary policy divergence remains the main driver. While the Fed may move very slowly, it is still the only major central bank that sits on a tightening path. The ECB, BOE and BOJ are considering looser monetary policy. Further support comes from the semi-safe-haven status the greenback has developed lately. The yen is the ultimate safe haven, but the USD is on its wings.

Another asset that had a miserable week is Gold. Has it reversed its long-term upward trend?

Positive US data means that the FED is set to tighten and that weighs on Gold prices. I think we could see a period of consolidation before the precious metal chooses a new direction.

Author

Jordi Martínez

FXStreet

Jordi Martínez is the Editor in Chief at FXStreet, leading editorial operations at the company, before being promoted to the role in 2023, he worked in several editorial positions at FXStreet, including roles as Senior Editor and

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.