Federal Reserve Chairman Jerome Powell made a statement at the European Central Bank summit in Portugal and once again suggested the possibility of two more rate hikes. Accompanying these words was a caveat that the decision would be made based on macroeconomic developments. However, the market reacted as if it heard this shocking news for the first time, causing the dollar to rapidly appreciate in value. The Fed chair didn't say anything new. He literally said the same thing during the press conference following the recent meeting of the Federal Open Market Committee. However, that was two weeks ago, so maybe investors might have forgotten those words. He also said the same thing during the hearings in the United States Congress held last week. Based on yesterday's reaction, it seems that most market participants have the memory of a goldfish. Such a thought is disheartening.
Simply put, the dollar's growth is not justified since essentially, there was nothing new. Therefore, a pullback is inevitable according to market principles, even if it's symbolic. It is possible that today's US unemployment claims report will serve as a formal trigger. After all, the number of initial claims is expected to increase by 2,000, and continued claims by another 1,000. Yes, the changes are even less than symbolic; they can be described as cosmetic in nature. The situation fundamentally remains unchanged. However, it didn't prevent the dollar from rising on Wednesday.
The GBP/USD pair broke the three-day range of 1.2700/1.2750 by breaking out of its lower band. As a result, short positions increased and a local downward movement started.
During the downtrend, on the four-hour chart, the RSI downwardly crossed the 30 middle line, indicating an oversold condition for short positions.
On the same time frame, the Alligator's MAs completed the intersection phase and entered a descending cycle.
Outlook:
Due to the sharp price change, a technical signal of oversold conditions could emerge, suggesting a potential consolidation or pullback. However, if speculators ignore these technical signals, the downtrend could lead the price to fall towards the 1.2550 level.
In terms of the complex indicator analysis, we see that in the short-term and intraday periods, technical indicators are reflecting a downward cycle. Meanwhile, in the mid-term period, the indicators are reflecting an upward cycle.
