GBPUSD is approaching the 1.3525 imbalance I discussed on Friday. The DXY is also just above its 97.50 single prints. Will we get an early-week reversal, or is the dollar rally over?
Watch today’s GBPUSD video below to see how I’m trading the pair. Plus, get the latest on the US Dollar Index.
GBPUSD is rallying to start the week as the DXY breaks its July trend line support. I discussed this level and its implications in the Weekly Forex Forecast.
Today’s rally from the pound could target 1.3525, a buy-side imbalance from July 11th. There is also a poor high, or unfinished auction, at 1.3504 that could attract the GBPUSD rate this week.
If GBPUSD resolves the 1.3525 imbalance, the DXY will likely be near its 97.50 imbalances that I discussed over the weekend. That would be a significant moment for dollar bulls, as defending the 97.70 region is imperative for the USD to remain constructive.
As mentioned to VIP members in Discord last weekend, the best approach right now is a flexible one. Although the DXY has reclaimed 97.70 on a weekly closing basis, the monthly close will be far more significant.
Additionally, the EURUSD remains above a 40-year level. The euro closed the month of June above the 1.1500-1.1530 region, so the fate of the US dollar remains uncertain.
In the near term, the GBPUSD is likely to find support at 1.3460, while the DXY remains below resistance at 98.15/98.20. Key resistance for the pound is 1.3525, but it extends as high as 1.3565 when viewed on the daily time frame.
I want to reiterate the importance of remaining flexible in these markets. I’ve discussed the dollar’s bullish potential in early July for the last three weeks. However, a much bigger test is looming for the dollar, and the outcome remains uncertain.
