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GBP/USD Topside Targets Favored as RSI Breaks Out of Bearish Momentum

GBP/USD Topside Targets Favored as RSI Breaks Out of Bearish Momentum

David Song, Strategist

Talking Points:

- GBP/USD Poised for Larger Rebound as RSI Breaks Out, BoE Sticks to Normalization Cycle.

- AUD/USD Struggles to Retain Bullish RSI Momentum as RBA Continues to Utilize Verbal Intervention.

- USDOLLAR Hits Fresh Monthly High on Upbeat 3Q GDP- PCE Inflation in Focus.

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GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • GBP/USD looks poised for a larger rebound as the Relative Strength Index (RSI) breaks out of the near-term bearish formation, while the Bank of England (BoE) remains on course to raise the benchmark interest rate in 2015; key topside region of interest comes around 1.5890 to 1.5900, former support.
  • The preliminary 3Q U.K. Gross Domestic Product (GDP) report may have a limited market reaction as the growth rate is expected to show a 0.7% rate of growth.
  • Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd has been net-long GBP/USD since October 28, with the ratio currently standing at +1.48.

AUD/USD

AUD/USD Daily Chart
  • AUD/USD may continue to mark fresh lows as it struggles to retain the bullish RSI momentum, while Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe continues to implement verbal intervention on the higher-yielding currency.
  • Despite the long-term bearish outlook for AUD/USD, need a close below 0.8510 (50% expansion) to 0.8530 (50% expansion) to favor a further decline.
  • Next downside region of interest comes in around 0.8380 (161.8% expansion) to 0.8430 (61.8% expansion).

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Read More:

Price & Time: 4-Year Low in AUD/USD

Gold Rebound Vulnerable Sub $1207- Weekly Opening Range in Focus

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11345.97

11372.38

11329.83

0.13

71.49%

GBP/USD Topside Targets Favored as RSI Breaks Out of Bearish MomentumUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index struggles to retain the bullish market reaction following the unexpected upward revision in the 3Q GDP report; may see month-end flows coming early as the Thanksgiving holiday approaches.
  • Even though the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, is expected to hold steady at an annualized 1.4%, any divergence from market expectations may dictate USDOLLAR price action going into December.
  • Continued failed attempts to close above 11,312 (78.6% retracement) to 11,351 (78.6% expansion raises the risk of seeing a move back towards former resistance around 11,120 (161.8% expansion) to 11,138 (61.8% expansion).

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Release

GMT

Expected

Actual

Gross Domestic Product (Annualized) (QoQ) (3Q P)

13:30

3.3%

3.9%

Personal Consumption (3Q P)

13:30

1.9%

2.2%

GDP Price Index (3Q P)

13:30

1.3%

1.4%

Core Personal Consumption Expenditure (QoQ) (3Q P)

13:30

1.4%

1.4%

FHFA House Price Index (3Q)

14:00

1.00%

0.91%

S&P/Case-Shiller House Price Index- 20 s.a. (MoM) (SEP)

14:00

0.30%

0.34%

S&P/Case-Shiller House Price Index- 20 (YoY) (SEP)

14:00

4.60%

4.90%

S&P/Case-Shiller House Price Index- 20 (SEP)

14:00

173.28

173.72

S&P/Case-Shiller House Price Index (YoY) (SEP)

14:00

--

4.81%

S&P/Case-Shiller House Price Index n.s.a. (SEP)

14:00

--

167.49

Consumer Confidence (NOV)

15:00

96.0

88.7

Richmond Fed Manufacturing Index (NOV)

15:00

16

4

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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