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GBP/USD Daily Forecast – U.S. Dollar Tries To Rebound After Sell-Off

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GBP/USD Video 22.07.20.

U.S. Dollar Index Tries To Find Support Near The 95 Level

GBP/USD stays near 1.2700 as the U.S. dollar attempts to rebound after a recent sell-off.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has found some support near the 95 level. The U.S. Dollar Index dipped below 95 back in March but then quickly rebounded to 103.

This time, the situation is more challenging for the U.S. dollar as safe haven buying has shifted to gold and silver while the world governments and central banks continue to print record amounts of money.

The U.S. Republicans and Democrats have started negotiations about the next coronavirus aid package but have so far failed to reach any consensus. Republicans want to offer a stimulus of $1 trillion while Democrats believe that such a program is not big enough.

At this point, it looks like negotiations may take several weeks, delaying the package at a time when the U.S. has significant problems in containing the coronavirus pandemic.

According to data from Johns Hopkins University, the U.S. has registered more than 3.9 million COVID-19 cases since the beginning of the pandemic, and this number continues to rise fast. Problems on the coronavirus front serve as an additional downside catalyst for the U.S. dollar.

Technical Analysis

GBP/USD has recently tried to get above the nearest resistance level at 1.2750 but this attempt was not successful. This is an important level as the previous attempt to establish an upside trend was stopped near 1.2750.

In case GBP/USD manages to get above this level, it will head towards the high of the previous upside move at 1.2815. A move above 1.2815 will likely lead to increased upside momentum.

On the support side, the nearest support level is located at the previous resistance at 1.2650. A move below this level will be very problematic for GBP/USD bulls as it will signal that GBP/USD does not have enough momentum to establish a new upside trend.

If this happens, GBP/USD will head towards the next support level at the 20 EMA at 1.2585.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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