- British pound and the Swiss franc were the worst performers recently against the US dollar.
- GBPUSD crashed below the 1.6000 support area and fell more than 100 pips Intraday.
- Chinese consumer price index data was released earlier during the Asian session, which missed the expectation of a 1.7% increase and came in at 1.6%.
- Chinese Producer Price Index (PPI) figures were released at the same time, which also came softer than expected with a reading of -1.8%.
The British pound collapsed yesterday against a basket of currencies, including the US dollar and the Euro. The reason was horrible economic data in the UK. There was an important bullish trend line on the hourly chart of the GBPUSD pair, which was broken after the release. The pair fell sharply once it broke the mentioned trend line. All major indicators are pointing oversold readings in GBPUSD, which is a warning sign in the short term. Currently, the pair is trading around the 1.236 extension of the last leg from the 1.5952 low to 1.6226 high. So, there is a chance of a short-term correction towards the 1.5920-40 area. However, the upside should be limited considering the current market sentiment. There is one important point that the pair is far away from the 100 and 200 moving averages, which can act as a magnet for a correction.
Intraday Support Level – 1.5880
Intraday Resistance Level – 1.5920
- Overall, as long as the pair stays in oversold area a minor retracement cannot be denied.
- UK employment data is a major risk event during the London session today.
There is a chance that the pair might move towards the 1.5850-40 area before we can witness a major correction. The mentioned level holds a lot of importance for the GBPUSD moving ahead.
The Swiss franc also declined heavily against the US dollar. The main reason was the decline in the Euro which always pushes the USDCHF pair higher. There is a bullish trend line formed on the hourly chart of the USDCHF pair, which acted as a support on a number of times. However, the pair is heading towards an important resistance area in the form of 200 simple moving average which is sitting around the 0.9560 level. The mentioned level also coincides with the 76.4% fib retracement level of the last drop from 0.9590 high to 0.9465 low. There is a chance that the pair might struggle around the mentioned resistance area and move lower. If it breaks the bullish trend line, then it would open the doors for a correction towards the 100 moving average.
Intraday Support Level – 0.9530
Intraday Resistance Level – 0.9560
- A struggle to break 0.9560-70 might call for a correction in the pair.
- 100 MA might act as a support in the short term.
If the pair breaks higher and settles above the 200 MA, then a run towards the last high of 0.9590 is possible moving ahead ahead. The RSI is well above 50, which is a positive sign.
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