- The British pound initially did rally during the session here on Monday, but it looks like it is struggling to get above the 1.3350 level, an area that's been important multiple times.
- And as we get closer to the end of the day, it's starting to look quite a bit more like a shooting star.
- That tells me that something, something out there just isn't quite right.
The 1.3350 level has to be captured on a daily close at this point before I start buying. If we fall from here, we could go look into the 200 day EMA sitting right around the 1.3135 level. And I think ultimately, we break below there and then the market really starts to fall apart. At that point, I would expect this market to drop down to the 1.27 level.
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On the other hand, if we do break above the 1.3350 level on that daily close, then we might go looking towards the 1.37 level, but I see the 50 day EMA in the previous uptrend line, both as potential problems.
Questions About the US Dollar
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Ultimately, I think there's a lot of questions out there about the US dollar because it has been so oversold that it is interesting that people are still pushing the idea that the Federal Reserve might cut rates going forward. But is that really a good thing? It may not be, and it may suggest that the US economy slows down. And what you'll quite often see is the US dollar struggle a bit heading into it.
Then it's generally accepted that the US economy is slowing down. Money runs to the US treasury markets and that of course demands US dollars. So don't get hung up on the narrative that perhaps the US is slowing down. So, you need to buy other currencies because time has taught us more than once that there's an initial running away from the US dollar and then a running to it because at the end of the day, if things are slowing down, a return of capital beats a return on capital, meaning that people run to safety valve type of situations and Treasuries are one of the biggest ones.
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