USDOLLAR Breaks October Downtrend, GBP's GDP Rally Fizzles
- GBPUSD back within July downtrend after GDP rally fizzles.
- USDOLLAR moves out of downtrend from October highs.
The end of the year has typically proven to be a bullish time for the US Dollar during the QE era of monetary policy (2008 to present), but this October got off to a rough start for the greenback.
The buck topped out in the first trading week of the month, and seemingly cataclysmic headlines regarding geopolitics, Ebola, and diminished easing from central banks (why this last point makes it to this same list, ask the market not me) promised to derail the seasonally bullish period.
Yet the US Dollar has proven resilient over the past week, having now broken out of its downtrend from the October 3 and 10 highs. The fledgling breakout coincides with failure today by GBPUSD to climb out of its downtrend from the July highs; indeed, even the good UK GDP data only provided a temporary pop.
Whereas the US Dollar may be on the verge of strength anew, the British Pound offers a less clear picture, at least technically. EURGBP and GBPUSD may have been trending for the past several months (EURGBP since August 2013, GBPUSD since July 2014), but the consolidation in October necessarily suggests that traders wait until the range breaks for a higher probability setup, irrespective of direction.
--- Written by Christopher Vecchio, Currency Strategist
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