GBP/USD Forecast 30/09: Struggles Below Resistance (Video)

(MENAFN- Daily Forex)

• The British Pound initially rallied on Monday and has continued the recovery that started on Friday.
• At this point, the market looks as if it is struggling to break above the top of the Thursday candlestick and that is something worth paying attention to.
• After all, this is a market that sold off quite viciously on Wednesday and Thursday. And if we cannot break the Thursday candlestick, it shows that we just don't have enough momentum to continue going higher.

If we can break above there, then we have the 50 day EMA to pay attention to. And again, the Wednesday candlestick is just above the 1.35 level. All things being equal, we are currently between the 50 day EMA, which is above and the 200 day EMA, which is below. And that typically will cause a bit of volatility.

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There are a lot of questions right now as to what's going to happen with the U S dollar, but it's worth noting that the US dollar has actually strengthened since the interest rate cut that screams that something isn't quite right.

Money is flowing into the U S dollar, mainly due to interest rates rising, despite the fact that the federal reserve is talking about cutting them. They aren't cutting them quickly enough. And that's part of the problem. Ultimately, if traders out there are a little bit concerned, they go to the US dollar because they need to go to the US treasury market.

EURUSD Chart by TradingView

The US treasury market demands those dollars, and that might be what's happening here. Either way, I think we've got a situation where the dollar may have finally bottomed out. We'll have to wait and see. But if we break down below the lows of the Friday candlestick, we then challenge the 200 day EMA and then possibly 1.32 below there. Anything below 1.32, we could see the British pound plunge.

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