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The British pound rallied during the trading session on Thursday to reach the crucial 50 Day EMA indicator. That being said, we have given back some of the gains and it looks like the US dollar might come back into favor. With that being the case, I could see this market pulling back a bit, but I also recognize that the British pound has been stronger against the US dollar than many other currencies, and with that being the case I think you have to look at this through the prism of a market that is just simply trying to sort itself out.
US Dollar Strength
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Even if the US dollar strengthens quite significantly, it will continue to struggle a bit against the British pound, due to the relative strength of this currency against many others out there. Ultimately, this pair starts to fall apart, it's more likely than not that other currency such as the Euro or the Canadian dollar will get absolutely crushed AnalysisEURUSD Chart by TradingView
Keep in mind that the technical analysis for this market is somewhat sideways, as we are sitting between the 50 Day EMA and the 200 Day EMA indicators, and it's also worth noting that we are at the 1.34 level, which is the middle of the overall consolidation range that we have been in between the 1.32 level on the bottom, and the 1.36 level on the top. As we are in the middle of this range, then it makes quite a bit of sense that we could look at the market as being“near fair value.”
Ultimately, the US dollar has been fighting most other currencies, and I think that will remain the same situation here. With the market being this noisy as it is, I think fading signs of exhaustion will more likely than not end up being selling opportunities, but you need to watch the US dollar against multiple other currencies, to get an idea as to how the US dollar may behave in general. If we do break above the 50 Day EMA and perhaps the 1.35 level, then it's likely that we could go looking to the 1.36 level after that.
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