Yesterday we saw a good growth of the US dollar against the background of a positive speech by the head of the US Federal Reserve. Yellen gave a positive assessment to the labor market and expressed optimism about the further growth of inflation. In addition, the probability for raising the rates of the US Federal Reserve has not changed, i.e. we can expect another increase until the end of 2017 remains. Due to these comments and forecasts, the pair declined by more than 100 points and stopped near strong support at 1.3450. Later, the pair adjusted upwards, but, not being able to gain strength, dropped again to the local minimum.
Today, special attention should be paid to the data on the US labor market.
Support and resistance
In the short term, the most likely scenario is further decline in a downward correction in the wake of a rise in investor attraction to the oversold dollar. The main catalyst for this movement will be a reversal of trade sentiment, investors will begin to close profitable long positions, which will weaken the position of the pound.
Technical indicators confirm the signal of further fall: MACD indicates a sharp decrease in the volume of long positions, the Bollinger bands are directed downward.
Support levels: 1.3480, 1.3450, 1.3380, 1.3310, 1.3270, 1.3200, 1.3125, 1.3020.
Resistance levels: 1.3515, 1.3615, 1.3690, 1.3820, 1.3900.
It is worthwhile to increase the volume of short positions, opening them at the current level with the targets of 1.3310, 1.3380. Stop-loss can be set at 1.3550.