- The British pound struggled to hold gains against the US dollar on Monday, with key technical barriers near $1.34 and support at $1.32.
- Despite mixed sentiment, dollar strength persists ahead of the Fed’s interest rate decision.
The British pound was very noisy during trading on Monday as the market tried to rally, but it just didn’t seem able to hang on to gains. It’s worth noting that the 200-day EMA is in the same neighborhood, which will naturally attract attention as it has offered support a couple of different times. That being said, this is a situation where you have to view the market through the prism of trying to figure out where we are going next. The 200-day EMA offering support and the 50-day EMA offering resistance isn’t unusual, but it’s also notable that the 1.34 level is in the same area, providing an additional barrier.
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This week features the Federal Reserve and its interest rate decision, and traders should be mindful of that. Ultimately, despite headline negativity surrounding the US dollar, it has strengthened against the British pound and many other currencies since the FOMC press conference. In other words, the market wasn’t behaving as many expected.
Massive Support Below
The 1.32 level below should act as significant support, and if we were to break down below that point, the British pound could start to fall apart, potentially reaching toward the 1.27 level. Rallies at this point should continue to pay attention to the 50-day EMA, the 1.35 level, and the previous uptrend line. Breaking above that would be very bullish, but for now, it’s important to note that the US dollar continues to show resilience despite all the challenges thrown at it; a trend is visible across multiple currency pairs.
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