Key Points
- Biden pulls out of election race.
- Important US data to come this week.
- US Dollar showing bullish reversal signs.
- GBP/USD bull run to end soon?
Biden Pulls Out Of Election Race
Pressure on US President Joe Biden has been mounting in recent weeks over concerns about his ability to run the country. Last night, Joe Biden released a lengthy statement that included the words, “My fellow Democrats, I have decided not to accept the nomination and to focus all my energies on my duties as President for the remainder of my term.” He also passed on his full support and endorsement for Kamala as the Democratic party’s nominee this year. What does this mean for markets?
As it stands right now, this does not mean a great deal, as it was clear that Trump was starting to lead the polls anyway. However, a Trump presidency is widely regarded as a positive thing for the US Dollar. This is because some of his economic policies, such as higher import tariffs, can lead to a stronger dollar. The election story will keep changing and developing daily, so we will continue to update you in the lead-up to November’s election day!
Important US Data To Come This Week
It may be a quiet start to this week from a scheduled events point of view, but there is plenty of volatility in the markets right now. The middle to end of the week is also expected to be busy, with vital US data out in the form of Gross Domestic Product (GDP) and Core PCE inflation reports.
The US economy is expected to have grown 1.9% in the last year, beating the previous month’s reading of 1.4%. If this becomes true, it could lead to a stronger dollar. Core PCE inflation will also significantly impact the US dollar after a weaker CPI inflation report two weeks ago.
US Dollar Showing Bullish Reversal Signs
Since the beginning of July, the Dollar Index (DXY) has been in a bearish trend, which is evident from the lower lows and lower highs. Now, the dollar has reached equal lows (sell-side liquidity) at 104.000 and has retraced into an H4 and H1 bearish order block. From here, we can see a reaction to creating a new higher low.
If you look at the RSI Indicator, you will see a clear bullish divergence around 104.000, which is an early sign of a reversal. However, to be confident in this, a break above the bearish order blocks would be ideal. From there, we could see the DXY begin a new trend higher.
GBPUSD Bull Run To End Soon?
GBPUSD has been on a bullish run recently, but it is showing signs of coming to an end. The price currently trades in a bullish order block and could react to create a new lower high.
Just like the DXY, GBPUSD is showing divergence, indicating a potential bearish reversal. The recent bull run has left behind a Fair Value Gap at 1.28200, which could be hit if the reversal plays out.
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