November 24, 2022
  • November 24, 2022

GBP/USD Recovery May Face Headwinds, Dollar Remains Supported

By on September 27, 2022 0

Highlights

  • GBP/USD traded to a new low at 1.0340 before correcting higher.
  • A major downtrend line is forming with resistance near 1.1050 on the 4-hours chart.
  • EUR/USD has corrected higher, but it faces many obstacles.
  • AUD/USD and NZD/USD are at risk of further declines.

GBP/USD technical analysis

The British Pound started a major decline well above 1.100 against the US Dollar. GBP/USD fell over 500 pips to set a new low.

Looking at the 4-hour chart, the pair traded below the 1.0650 support level to move further into a bearish zone. The pair settled well below 1.1000, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

A new low was formed near 1.0340 before the pair began an upward correction. There was a slight increase above the 1.0650 level.

The pair climbed above the 23.6% Fib retracement level of the downward move from the 1.1738 high to 1.0340 low. On the upside, an initial resistance stands near the 1.0950 area.

The first major resistance is near 1.1000. A major downtrend line is also forming with resistance near 1.1050 on the same chart. The trendline is near the 50% Fib retracement level of the downside move from 1.1738 high to 1.0340 low.

A clear move above trendline resistance could open the door for further upside at 1.1200. Any further gains could send the pair towards the resistance level of 1.1400.

On the downside, an initial support is near the 1.0650 level. The main support is at the 1.0550 level. A bearish break below the 1.0550 area could send the pair towards the 1.0500 level. The next major support is near the 1.0340 level, below which the pair might even test the 1.0200 level.

As for EUR/USD, the pair has started a short-term bullish correction from the lows of 0.9550, but it faces many obstacles on the upside near 0.9750 and 0.9850 .

Economic releases

  • US New Home Sales for August 2022 (Monthly) – Forecast of -4.9% vs -12.6% previously.
  • US Durable Goods Orders for August 2022 – Forecast of -1.1% vs. -0.1% previously.