GBP/USD 1H Chart 8/2/2012 11:00AM EDT
The GBP/USD jumped higher today right before Draghi took the helm at today’s ECB press conference at 8:30AM EDT. The rally came up to a declining trendline, as well as tested a previous head and shoulders pattern from which the market has been sliding down this week. Draghi’s comments were interpreted as a walking-back of London’s comments. This means the market was disappointed that Draghi did not expand on what the ECB will do after he said he will do everything in its mandate to preserve the euro. Instead he focused on the fact that governments have to take the lead and the fact he said “withing its mandate”.
This provided general risk-off, and USD and JPY buying.
The next support pivot below the current consolidation low of 1.5530 is 1.5460. 1.5450-1.5460 area will be a tough pivot to break ahead of tomorrow’s US Non-Farm Payroll risk-event. Also, there is probably some demand at 1.55 as well, coinciding with a trendline connecting July’s major lows.
GBP/JPY 1H Chart 8/2/2012 11:17AM EDT
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The GBP/JPY is also continuing the bearish move after its head and shoulders pattern to start the week. It too is channeling down, and had the same whipsaw dynamic the GBP/USD had around the ECB risk-event.
The near-term support pivot is at about 120.85, below which the market exposes the next key support pivot at about 118.85. The market will have a tough time pushing through these levels ahead of the NFP and is likely to consolidate during the Asian-European session before the risk event.
Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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