How Much Further Can The Rally In The British Pound Go?
MaiMarFX | Feb 22, 2021 04:58AM ET
Positive market sentiment continued as investors took comfort from positive news on vaccine efficacy. In Israel, the Pfizer Inc. (NYSE:PFE) and BioNTech SE (NASDAQ:BNTX) Covid-19 shot appeared to stop the vast majority of recipients from infection.
The anti-risk U.S. dollar turned lower amid optimism about the global recovery. The pound sterling extended its gains until a high of 1.4052 despite its overbought trading levels. The euro traded steady between 1.21 and 1.2150.
This week investors will be monitoring Federal Reserve Chair Jerome Powell’s testimony on Tuesday. Powell is likely to emphasize a dovish message to Congress in his testimony, stressing that now is not the time to talk about normalizing policy.
GBP/USD: How much further can the rally go? /h3
The pound traded on a high note as the nearing reopening of the U.K. economy provides a tailwind for the currency. While the risk of pullbacks remains amid overbought territory, the overall uptrend could favor higher targets at 1.42 and 1.4330. If the pound is able to stabilize above the 1.4050-barrier, we will focus on a higher target at 1.4170. For bearish momentum to accelerate we will need to see a break below 1.39. A crucial support is still seen at around 1.3750.
EUR/USD
The euro steadied above 1.21 and as long as the pair remains above 1.2050, we anticipate further gains until 1.2170 and possibly a test of 1.22-1.2215.
DAX
The index remained within a relatively narrow price range between 14050 and 13850. On the upside we will focus on a break above 14100 that could reinvigorate bullish momentum towards 14200 and maybe even spur a rally towards 14450. On the downside we see a support at 13750.
We were already able to book a good profit today with our short entry at 13890.
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