Looking at the charts, it would seem that there is no single unifying theme dictating price action. While the dollar gave up ground to the euro and franc, it rallied against the yen and the pound.
Country-specific events are causing currencies to print mixed scorecards. For instance, the euro and franc benefited from the positive economic reports that came out of the euro zone. On the other hand, the pound was held back by dovish remarks from a Bank of England (BOE) official while USD/JPY started to track the uptick in U.S. Treasury bond yields.
I’m wonder if the dollar will still be all over the charts this week. Unlike last week, our forex calendar lists a handful of economic reports from the U.S., including the much anticipated preliminary GDP, which could give us more clues on the Fed’s plans for tapering. I guess we’ll have to wait and see how the reports turn out!
On the hourly timeframe, I see that USD/JPY could retrace some of its gains before continuing its rally. I’m looking at the area around 98.00 where the pair previously found resistance and where the SMAs coincide with the Fibonacci retracement levels. If support holds and the fundamentals align with my bias, I’ll probably jump in on a long.
GBP/USD: Cautiously Bearish
As for Cable, I’m thinking that the uptrend could be over. Not only has the rising trend line been broken, but Cable also broke through both the 200 and 100 SMAs. Now, I can’t say that I’m completely bearish since the pair has yet to make a lower low. For now, I’ll maintain a “cautiously bearish” approach.