GBPUSD is attempting another breakout, but the daily close will tell the story.
Watch today’s video for the key level to watch today. Then scroll down for my thoughts on GBPUSD, including key levels, high-impact events to watch this week, and the latest on the US Dollar Index (DXY).
GBPUSD started the week pushing above the 1.3580 resistance. Buyers made progress on Monday, but the move isn’t confirmed yet.
The pair has to close above 1.3580 on a daily closing basis to validate the breakout. Until that happens, traders should stay cautious.
GBPUSD tagged the 1.3618 poor high I’ve discussed in recent videos. As of now, that level is serving as resistance.
For support, 1.3540 is the new line in the sand. Last week, it was resistance, but now it’s flipped to support. A sustained close below that level would be bearish and could send GBPUSD toward the poor lows on the chart.
If bulls can confirm the breakout this week, the 1.3700 imbalances from July are well within reach. Those inefficiencies from July remain open for business, but 1.3580 holds the key.
This week’s calendar is much fuller than previous weeks, so expect an increase in volatility. That’ll be a welcome sight for those feeling underwhelmed by recent conditions, myself included.
UK Average Earnings and Claimant Count come out on Tuesday, followed by CPI on Wednesday. On Thursday, we have a Bank of England rate decision, which is always a market mover.
The Fed is also in play on Wednesday with their rate decision and Powell’s press conference. That alone could set the tone for the rest of the week.
Add in US retail sales, Canadian CPI, and Australian jobs data, and you’ve got a heavy calendar that can fuel volatility across the board.
Keep a close eye on this week’s Forex Factory calendar. It’s easy to get complacent with how slow markets have been recently, but this week promises a lot more action.
Feeling overwhelmed by the screenshot above? Check out my Forex Factory calendar guide for step-by-step instructions.
Back to the technicals, the DXY is hanging around key support. Last week’s close below 97.70 was significant, and it leaves the door open for more downside.
However, the 96.60/70 area is the one to watch. GBPUSD has yet to clean up those poor lows, and as long as the DXY is under 97.70, the path of least resistance is lower.
That setup gives GBPUSD room to extend higher if buyers can confirm above 1.3580. But if the pair closes back under 1.3540, sellers could regain control to target areas like 1.3484.
This week has the potential to be pivotal for both GBPUSD and the dollar. The key is letting the daily closes do the talking.
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