pounds to dollars

Pounds to Dollars 1 Sep 2010

Despite today’s modest rally in cable the pounds to dollars pair continues to trade with a heavily bearish bias following its recent failure to breach the USD1.60 price point as the pair trade at USD1.5451 at time of writing.  Yesterday’s wide spread down candle was particularly significant as it breached the 200 day moving average along with a potential support area marginally below USD1.54.  Whilst today’s price action has pushed the currency pair back above both these key levels, the recovery looks weak, particularly with the price congestion immediately above which is also reinforced by the presence of both the 9 and 14 day moving averages.  Indeed with the latter of these now crossing below the 40 day moving average this is adding a bearish signal to the mix and, as such, we can expect to see cable move lower in the short term to break below USD1.5326, followed by a re-test of USD1.5241 with any failure here likely to push cable to USD1.51 and lower.  Longer term we can expect to see a much deeper move, possibly towards USD1.4395 in due course.

This week’s fundamental news is, of course, dominated by Friday’s non farm payroll data which is expected to come in at -101k, marginally better than last month’s -131k but still confirming that the US labour market (much like the housing market) is still a major cause for concern.  With today’s ADP figures coming in worse than expected it is likely that the nfp too will disappoint, further weakening the recent dollar rally.  Details of the remainder of this week’s fundamental news can be found on my main forex trading site where you will also find a daily analysis of the usd index – a crucial indicator for all forex traders.

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