USDOLLAR Tests June High; Overbought for First Time in 2014

Talking Points:

- GBP/USD Continues to Search for Support as RSI Fails to Retain Bullish Trend

- USD/CAD Breakout Gathers Pace; Trades Back Above Former-Support

- USDOLLAR Coming Up Against Trendline Resistance Ahead of 2Q GDP, FOMC

GBP/USD:

• 
  Will continue to watch downside targets as the Relative Strength Index (RSI) fails to preserve the bullish momentum carried over from 2013.
  


• 
  Will retain a constructive long-term view as long as GBP/USD holds above June low (1.6697); Bank of England (BoE) remains on course to normalize monetary policy ahead of Fed.
  


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  However, DailyFX Speculative Sentiment Index (SSI) for GBP/USD has flipped, with the ratio now standing at +1.05; retail crowd has turned net-long the British Pound.
  

USD/CAD:

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  Bullish RSI momentum favors bullish breakout as USD/CAD carves long-term higher-low in July.
  


• 
  A break above 1.0900-20 should favor a move into the key Fibonacci confluence around 1.1000-20.
  


• 
  Long-term outlook remains bullish as USD/CAD preserves the upward trend from 2014, while Bank of Canada (BoC) retains a dovish tone for monetary policy.
  

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USDOLLAR Daily

Chart – Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

• 
  Dow Jones-FXCM U.S. Dollar Index tests June high (10,541) as U.S. 2Q GDP well-exceeds market expectations; RSI shows first overbought reading for 2014.
  


• 
  Need less-dovish forward-guidance from Federal Open Market Committee (FOMC) to favor additional USD strength; will Fed hawks finally dissent?.
  


• 
  May face a near-term pullback ahead of Non-Farm Payrolls (+230K) as the ADP Employment report disappoints.
  


• 
  Interim Resistance: 10,555 (50.0% retracement) to 10,561 (100% retracement)
  


• 
  Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)
  

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— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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USDOLLAR Tests June High; Overbought for First Time in 2014