USD weak but GBP weaker SHORT USDGBP

USDGBP, Daily               

The dollar is trading buoyantly, trading at or nearly intraday highs versus the euro, yen, pound, Australian dollar, along with a number of other currencies. EURUSD is presently down by 0.4%, at 1.0739 bid, while USDJPY is up 0.2%, at 112.58, 35 pips up on the low seen in Tokyo trade. The U.S. data calendar is pretty thin this week, leaving focus on Fed speaks and Trump’s twitter page. Corporate earnings seasons will also continue, with nearly 34% of S&P 500 companies still to “show and tell” Q4 results. The usual pattern of companies beating carefully guided forecasts has so far been seen, with nearly 80% of those already reported having done so. I take a bullish view of the dollar, buying in after a period of losses as the post-election Trump reflation trade unwound, though watch out for any fresh protestations on exchange rate values from Trump. The U.S. President is due to meet Japanese PM on Friday.

The preferred pair has been cable with a SHORT position opened this morning from Friday night’s weak close, at 1.2464.  Target 1 on the daily chart is 1.2300 (a multiple of the 14 DATR, a psychological round number and between the recent 50.0 and 61.8 Fibonacci levels. Target 2 is around the cluster of the recent daily lows at 1.2150.  The short term MACD has turned down, the RSI is neutral at 51 but has moved down from over 62 and the parabolic SAR still remains positive.  Further resistance to the move down is around the 1.2420-1.2400 zone where the 20 and 50 day moving averages converge. The 1.2700 zone has held three times in the last few weeks and a break over this area would see more strength in the pair.


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Stuart Cowell

Senior Market Analyst


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