- The British pound initially tried to rally in the early hours of Monday but found the 1.33 level to be a bit too much to get beyond.
- Because of this, the market is likely to continue to see a lot of downward pressure, despite the fact that I also think there are plenty of areas underneath that could offer more.
- With that being the case, the market is likely to continue to look at the 50 Day EMA below for potential support.
- This is near the 1.3090 level and is rising. If we can break down below there, things could change quite drastically.
US Dollar Strengthens
During the trading session on Monday, we have seen the US dollar strengthen against multiple currencies, not just the British pound. The question at this point in time is whether or not traders will continue to jump into the US dollar as a result of the tariff talks over the weekend going fairly well. After all, the United States and China have both agreed to cutting tariffs, as we should see a 90 day hiatus to come to terms with whether or not a longer term deal can be struck. This has the money flowing back into the United States, and that does make a certain amount of sense. The question at this point in time is whether or not it can sustain itself?
The 1.31 level below is where we would see the 50 Day EMA jumping toward, and therefore I think that might be the next potential target. If we were to break down below there, the market then will test the 1.30 level underneath there. The 1.30 level is an area that I think the “rubber meets the road.” What I mean by this is that if we were to break down below that level, then I think the overall uptrend probably ends fairly quickly. You would more likely than not see the US dollar strengthening against almost everybody else at the same time.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.