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Should the market venture below the 200-day EMA, it might very well set off a sustained negative trajectory.
- In the recent span of 24 hours, the GBP/USD has been met with a notable wave of negativity, particularly following the release of PMI figures from the United Kingdom that fell considerably short of expectations.
- Remarkably, both indicators have dipped into contractionary territory, prompting an evident shift in investor sentiment towards the US dollar as a safe haven.
- It’s imperative to note that the United States PMI data is still pending, and if these figures echo a similarly bleak outlook, the current scenario might witness a complete turnaround.
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Currently, the market finds itself positioned between two significant technical indicators, namely the 50-day Exponential Moving Average (EMA) and the 200-day EMA. This arrangement alone tends to introduce a fair degree of market volatility and turbulence. Essentially, this market continues to be characterized by pronounced fluctuations, a trend that’s poised to persist given the upcoming Jackson Hole Symposium speech scheduled for Friday. This impending address holds substantial sway over the market’s trajectory, with close attention directed toward the tone adopted by Jerome Powell, the Chairman of the Federal Reserve. While a hawkish stance from Powell could potentially bolster the US dollar, there’s a prevailing sense of skepticism among market observers. Despite this underlying doubt, the sentiment appears to be one of cautiously holding back belief.
All in all, the market seems to have settled into a holding pattern, even in the wake of a significant sell-off experienced early in Wednesday’s session. Lending support to this situation is the presence of a major uptrend line, serving as a robust underlying foundation. Consequently, the resilience of this support suggests that a substantial impetus would be required to breach this market’s defenses. Should the market venture below the 200-day EMA, it might very well set off a sustained negative trajectory. Such a scenario could potentially trigger a significant flight towards the US dollar, impacting not only the British pound but also extending across various currency pairs.
In essence, the lens through which we interpret this situation hinges upon whether it unfolds as a value-based opportunity or steers toward a market breakdown. The forthcoming days hold the promise of providing valuable insights into this pivotal question. Nonetheless, I think this is a market that will have a lot of questions to answer by the end of the week – or so.
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