- It is worth noting that the British pound broke the level of 1.2350.
- If we break down below, there is a very negative development, but we have stuck to that line to show signs of resilience.
- US 10-year yields continue to rise, and this, of course, continues to increase the value of the US dollar.
With that being the case and the fact that the United States is the only place you see, like, on the line of a strong economy when it comes to major economies, it makes sense that the US dollar continues to be the only game in town.
Selling short-term rallies
I think short-term rallies are selling opportunities and it’s worth noting that the previous daily candlestick was a shooting star and not only the British pound against the US dollar, but also the Australian dollar, the New Zealand dollar, etc. Now, I think yields are a little bit lower, then it’s likely that we could bounce back a little bit from here, but I think the 1.25 level is providing resistance.
Note that we have the jobs number on Friday, and that of course has a big impact on what happens to the US dollar. But right now the bond market is under control and nobody cares what the Fed thinks. As long as this is the case, the US dollar will move along with 10-year yields and other markets. If we continue to see yields rise, people want dollars, it’s that simple. Think about it this way, most of the debt in the world is denominated in dollars and you need to pay it back quickly. If you can, it takes dollars. Moreover, why take an asset that depreciates against the dollar when you can just flip it for dollars? So it’s kind of a feedback loop.
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