It has been a relatively quiet morning for North American trade due to the lack of economic releases out of the US, but that doesn’t mean that the noise created at the end of last week, and over the weekend, is being ignored. The stellar employment report on Friday and the return of Grexit (Greek exit of the Eurozone) talk over the weekend has markets buzzing with anticipation of what’s to come. Investors are becoming accustomed to major market moving events so far in 2015 with the Swiss National Bank fallout, the European Central Bank Quantitative Easing announcement, and interest rate cuts from the three major financial continents; so it’s almost as if we are just waiting for the next shoe to drop somewhere.
While we wait for that next bombshell though, there may very well be a quiet time of reflection in major markets with little extreme movement until something more substantial hits the wires. Last week’s short squeeze against the USD seemed to be violently reversed as the EUR/USD specifically was put back in its place like a mother sending her child to timeout, but that wasn’t necessarily the case with other currencies. The GBP/USD for example surged over 350 pips during the early part of the week, but only gave up about 150 of those pips during the NFP celebration.
So far this morning, most of the USD pairs have been oscillating both up and down, which is surprising considering all the good news coming from the US and all the bad news from other regions of the world. The GBP/USD though, seems to be standing on the sturdiest ground of all the major pairs. The Bank of England has been fairly neutral of late while the rest of the European central banks have been frantically hitting the dove button. When it comes to every other major central bank outside of the Federal Reserve, neutral is the new hawkish, and the BoE exudes that stance.
Using that backdrop, the GBP/USD may be prone to some more oscillation with the occasional surge, so finding potential levels of support could become paramount to that thought process. The psychologically significant support of 1.52 has been probed already this morning, but there may be more significant support below that level that corresponds with a Fibonacci related Bullish Gartley Pattern. A run through 1.52 could be the catalyst for support near 1.5170 to be found and prompt another rally up to previous resistance near C if it is reached.