August 11 2021
Taking a look at the 10 pip EURUSD chart, we can clearly see a break of support at 1.1760 (green line) and then a test of the break, albeit from 1.1750 which usually signifies a true break, this was followed by a sell off to just below 1.1720.
This is all very USD bullish, however I just get the feeling the dollar is looking a little overbought. So I would personally like to see a correction back to say 1.1760/70 before we drop towards 1.1700/1.1680 support on our way to 1.1600.
If todays CPI is a strong number, you’re not going to see my hoped for correction, in the short term. However, if CPI disappoints we could be buying dollars at better entry points closer to 1.1800.
Since GBPUSD failed to break resistance up at 1.3980/1.4000 it has continued to correct lower, first testing 1.3880 where a number of rallies were attempted, but on each occasion the GBP stalled at 1.3940/50.
Fridays US NFP for June provided the ammunition and momentum to break 1.3880, to test support today at 1.3820/1.3800. To keep the downside momentum going, we need to see further losses and a break of 1.3780, for a test of 1.3700.
If we are unable to break support I would expect the GBP/USD to recover to 1.3860/1.3880. A big miss in CPI or a strong UK Release GDP number could see us heading back up to 1.3950/60 again.
Today’s US CPI will have its roll to play today in trading, however, we should consider what impact tomorrows Q2 UK GDP could have before committing heavily to buying dollars for pounds.