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21.03.202409:12 Forex Analysis & Reviews: Hot forecast for GBP/USD on March 21, 2024

A quick glance at the chart shows that something extraordinary happened during Federal Reserve Chair Jerome Powell's press conference. There is simply no other explanation for the dollar's collapse. Especially considering that the interest rate remained unchanged, which was quite expected given that inflation has accelerated recently. However, it was precisely this inflation growth that caused the dollar's decline. Powell noted that the surprising pickup in inflation in January and February hadn't fundamentally changed the Fed's picture of the economy. "Inflation moves down gradually on a sometimes bumpy road," Powell said in a press conference. So, in this way, this suggests that the central bank is ready to lower interest rates, even with the current level of inflation. The market responded accordingly, factoring in the expectation of a rate cut as early as June.

And it seems that today the dollar may continue to lose its positions. Partly due to preliminary assessments of business activity indices, which are expected to rise in Europe and fall in the United States. But the main event of the day will definitely be the Bank of England meeting. Although the rate itself is almost certain to remain unchanged, the distribution of votes on the issue of interest rates is important. It is expected to remain roughly the same as it was a month and a half ago. From this, a simple conclusion follows: there is a high probability that the level of interest rates in the United Kingdom and the United States will at least be equal. And possibly even for some time in the United Kingdom, they will be higher. This will boost the pound's growth, followed by the euro.

Exchange Rates 21.03.2024 analysis

The pound strengthened by more than 100 pips amid the dollar selloff. As a result, the price returned to the level of 1.2800. Due to the intense upward movement, the corrective cycle from the local high was interrupted.

On the four-hour chart, the RSI upwardly crossed the 50 middle line, thus reflecting an increase in the volume of long positions.

On the same time frame, the Alligator's MAs have changed direction by moving upwards. This may signal a change in trading interests.

Outlook:

In this situation, the pound appears to be overbought in the short-term timeframes, which may complicate matters for buyers. In this case, the level of 1.2800 could act as resistance, leading to a pullback. However, if the price settles above the control level by the end of the day, the volume of long positions may increase despite signs of overbought conditions.

In terms of the complex indicator analysis, we see that in the short-term period, technical indicators are pointing to a bounce. Meanwhile, in the intraday period, the indicators are reflecting an upward cycle.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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