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GBP / USD Video 04.05.21.
Support test at 1.3820
GBP / USD is currently trying to stabilize below EMA 50 support at 1.3820 as the US dollar gains ground against a large basket of currencies.
The US dollar index has managed to climb above the 93 level and is heading towards resistance at 93.20. If the US dollar index hits the test of this level, the GBP / USD pair will come under more pressure.
The United States on Friday provided a non-farm payroll report that showed the US economy created 916,000 jobs in March. The report topped analysts’ consensus of 647,000. The unemployment rate fell from 6.2% in February to 6% in March. The strong recovery in the US labor market pushed Treasury yields higher and supported the US currency.
Today, forex traders will focus on the final reading of the US Services PMI report. Analysts expect the services PMI to fall from 59.8 in February to 60 in March, as the services segment continues to recover from the blow from the coronavirus pandemic.
GBP / USD is currently testing the support level at 50 EMA at 1.3820. If this test is successful, GBP / USD will head to the next support at 1.3800. The RSI is in moderate territory, and there is plenty of room to gain momentum on the downside in case the right catalysts emerge.
In the event that GBP / USD drops below support at 1.3800, it will move to the next support level at 1.3780. A move below support at 1.3780 will pave the way for testing the next support which sits at recent lows at 1.3745.
On the upside, GBP / USD needs to settle above the 50 EMA at 1.3820 and the 20 EMA at 1.3825 to have any chance of developing short-term bullish momentum. The next resistance level for the GBP / USD pair is at 1.3865. If the GBP / USD manages to move above this level, it will head to the next resistance at 1.3900. A move above this level will push GBP / USD towards resistance at 1.3950.
For an overview of all of today’s economic events, check out our economic calendar.
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