What FX Price Behavior means vs. Techncial Chart Analysis

Focus on EURGBP vs. GBPUSD

The US economic fundamentals from jobs/unemployment, real estate prices and the recent revision on the US GDP didn't provide any follow through recovery for the US Dollar. To top it all these reports, the political gridlock in Washington added more negative sentiments among all the global markets from stocks to the foreign exchange market. And this has led the US Dollar as indicated by the USD Index to move lower to an important psychological support price below the 73.85 basis point. With a low registered this week at 73.42 may well be defined as the key levels where traders would have reacted to a heavier selling pressure for the US dollar. However, not a lot of investors, market strategists and traders are willing to take any fresh short positions with the US currency. And still opted to continue supporting the precious metals market as new historical prices are dominating this week's trading sessions making a new high at the USD1632.79/oz.

We have seen the spread /straddle strategies applied between bull and bear Foreign exchange institutional traders on Spot and futures have added the volatility on market reactions. Although, in between market sessions investors have learned to take a sideline attitude while watching and waiting for the outcome of a struggling political vote. And more importantly as to how such a play would be made on both sides of the market.

The European cross rate of the EURGBP has been more resilient to these factors; although the corrective move of the Euro can be seen more compared with a steadier GBPUSD making a comeback to the 1.6490 levels, while the EURUSD reaching a 1.4536 high from a 1.4228 low for the week ending the 29th of July, 2011. The indirect trading effect of the EURGBP cross pick has withstand almost all the swing trades and volatility on a session to session levels and maintained its trend back to the 0.8750 closing price from a corrective move at the 0.8883 high in line with the corrective move of the Euro.

The price behavior of the Pound and the Euro in a bigger techncial perspective have been more in line with its bullish trend. Meaning, that inspite of their low price extensions, have found some support to recover due to the fundamentally oriented market  pushing the US Dollar to do the same from its recovery. As we have mentioned, that the critical price for the USDX below the 74.40 and 73.85  range levels for the week would reinforce its bear signals. And this is contrary to its registered high of 76.70 made during the 2nd week of July.
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