The GBP/USD increased significantly today and resumed the bullish momentum. Price is almost to reach the 1.4344 swing high where it could find temporary resistance. However, the rate is expected to increase further and to ignore the static resistance as the USD is punished the USDX’s drop.
I’ve said in the last week that personally, I’m expecting the dollar index to drop further on the short term after the failure to make new highs and most important after the failure to reach and retest the near term resistance levels.
The dollar index plunged today and now is located below an important dynamic support. It should drop further in the upcoming days because it could be attracted by a very strong dynamic obstacle.
The USD wasn’t inspired by the US economic data today, the figures have come in mixed. The Retail Sales have increased by 0.6% in March, beating the 0.4% estimate. It has increased unexpectedly after two decreasing months.
The Core Retail Sales rose by 0.2%, matching expectations and the 0.2% growth in the former reading period, while the Empire State Manufacturing Index was reported at 15.8 points, much below the 19.8 estimate and versus the 22.5 in the former reading period.
The Business Inventories rose by 0.6%, matching expectations and the 0.6% in the former reading period.
The currency pair is almost to reach the 1.4344 static resistance and it seems determined to take this out. I’ve said in the last weeks that the rate could come down only to retest the broken resistance level before will jump higher.
It has retested the outside sliding line (SL) and now is expected to pass above the 1.4344 former high. A valid breakout will confirm that the rate will resume the long-term upside movement. You could still go long if the rate will make a minor consolidation above the 1.4344 level with a Stop loss below it.