The US dollar was seen to remain weak in the early Asian session this morning, following market reactions to last week's FOMC meeting. However, last Friday, the US dollar began to show a slight increase in value due to the expectation of profit taking activities by investors over the weekend.
Among other factors seen that could influence the movement of the US dollar this week is a report on tariff developments on Chinese goods that is being considered for elimination by US President Joe Biden.
While the US dollar depreciated last week, most major currencies including the Pound were seen to have taken the opportunity to make gains to signal a change in the direction of movement on the price chart for this week.
The interest rate hike by the Bank of England (BOE) at last week’s policy meeting has made the Pound soar sharply in trading last Thursday, but the momentum of the surge failed to be sustained over the weekend.
Continuing this week's trading, investors will be waiting for the UK inflation data to be released on Wednesday, and if the inflation reading meets expectations, it will allow the Pound to continue to strengthen.
Examining the price movement on the chart of the GBP/USD currency pair, the price is seen to have made a decline again at the end of last week's trading session on Friday after a significant jump on Thursday reached a high of 1.24000. However, the decline is seen to happen again testing the RBS (resistance become support) zone of 1.22000.
The Asian session at the market opening earlier this week saw the price manage to stay above the 1.22000 zone but still has not passed the Moving Average 50 (MA50) barrier on the 1 -hour time frame to give a more positive signal for a bullish move.
If the rise continues, the price is seen to test the initial resistance at 1.2300 before returning to the 1.24000 level reached last week.
For a continued higher rise, passing that level will target the price further towards the previous focus zone at around 1.25000 or at 1.26000.
On the other hand, if the price does not manage to continue rising earlier this week, the price is likely to move lower below the RBS 1.22000 zone before continuing the lower decline around the 1.21000 zone.
For a lower decline, the next target is for the price to test the support zone of 1.20000 after the price that made a decline last week was seen to have reached the level of 1.19400 for a record low of 2 years.
