British Pound Pulls Back Against U.S. Dollar
GBP/USD is currently testing the support at the 50 EMA at 1.3875 while the U.S. dollar is mostly flat against a broad basket of currencies.
The U.S. Dollar Index did not manage to settle below the 20 EMA at 92.45 but remains close to this level. In case the U.S. Dollar Index settles below the 20 EMA, it will move towards the support at 92.30 which will be bullish for GBP/USD.
Today, foreign exchange market traders will focus on Fed Interest Rate Decision and subsequent commentary. The rate is expected to stay unchanged, but traders will have a chance to learn whether Fed has started to discuss the future of its asset purchase program.
At this point, it looks that the Fed will stay very dovish as the recent spread of the Delta variant of coronavirus has added uncertainty to the economic outlook. However, if any comments sound hawkish, the U.S. dollar may get additional support.
GBP/USD faced resistance near 1.3900 and made an attempt to settle below the 50 EMA which is located at 1.3875. In case GBP/USD manages to settle below the 50 EMA, it will gain downside momentum and move towards the next support level at 1.3835. RSI is in the moderate territory, and there is plenty of room to gain additional momentum in case the right catalysts emerge.
If GBP/USD settles below 1.3835, it will move towards the support at the 20 EMA at 1.3810. A successful test of this level will push GBP/USD towards the next support at 1.3800.
On the upside, the nearest resistance level for GBP/USD is located at 1.3900. A move above this level will signal that GBP/USD is ready to continue its rebound. The next resistance is located at 1.3920. If GBP/USD gets above this level, it will move towards the resistance at 1.3950. A successful test of the resistance at 1.3950 will open the way to the test of the resistance at 1.3980.
For a look at all of today’s economic events, check out our economic calendar.