The US dollar fell slightly during the day, but just slightly, as the GBP/USD
market has continued to struggle overall. The 1.25 level underneath is a large, round, psychologically significant number, and that of course is an area that will cause a lot of interest by the round number itself. With the jobs number coming out in a few sessions, that could move the United States dollar significantly, and that almost always moves this pair as well. On top of that, the oil markets are important, and it looks like they are ready to rally. If we can continue the rally, I think this pair will break down below the 1.25 level and then drift towards the 1.2350 level next.
Alternately, if we bounce from the 1.25 handle, the market could then go to the 1.2750 level, and then eventually the 1.30 level after that. I think that we have a significant choice to make in this general vicinity, but it may be a couple of days before we get enough clarity to put money to work. It could be a very difficult couple of sessions, but eventually I believe that we will have enough clarity to start putting money to work. Ultimately, this is a market that will have to pay attention to the jobs number, the Toronto housing bubble, and of course the crude oil markets. Expect a lot of volatility because of these competing factors, but the markets look decidedly negative, and therefore it’s probably easier to sell on a breakdown.
Written by FX Empire