At the end of the trading week, the US dollar surged to its 9-week high. Traders started buying the greenback after the publication of the FOMC meeting results. The US authorities announced their intention to revise the policy and consider a rise in the key interest rate.
Thus, the euro/dollar pair dropped to the lowest level since mid-April. Today, it has been trading near this reading. At the same time, the pound/dollar pair continues losing value amid a disappointed report on the UK retail sales.
In May, consumer activity unexpectedly declined by 1.4% after an increase of 9.2% in April, when the restrictions imposed to curb the virus spread were lifted. Economists had foreseen a rise of 1.6%.
Let us take a look at the trading charts.
The pound sterling is falling amid high speculative activity. As a result, the currency broke several psychological levels of 1.4050, 1.4000, and 1.3950.
On the chart, we can see that the pair is hovering near the level where it slowed down at the beginning of May. That is why the volume of short positions may decrease, thus leading to a technical correction. If the speculative interest remains the same and the quote fixes below 1.3895, it may slide even deeper despite oversold conditions.
Yesterday, the euro/dollar pair went on dropping, thus boosting demand among market participants.
From the technical point of view, the pair passed the psychological level of 1.1950. That is why the market sentiment may change in the near future.
Analyzing the trading chart, we see that speculators are pushing the price lower despite oversold conditions. The next support level, which may lead to a decline in the volume of short positions, is likely to be located near 1.1860.
00:41 UK RETAIL SALES, m/m