USD On The Ropes Vs The Forex Majors

The summertime woes continue for the Greenback as values slide across the majors. Today’s session has brought little reprieve for USD bulls, with losses vs the Japanese yen, British pound, and Canadian dollar pacing the action. Going into tomorrow’s speech by Jerome Powell at the virtual Jackson Hole summit, forex players continue to bet against the dollar.

Thursday will be a big day on the financial markets as Fed Chairman Jerome Powell takes the stage. Although inflation has recently been on the uptick, he is expected to deliver an extremely dovish address. According to the experts at Brown Advisory and Evercore ISI, Powell is to suggest that the FED will let inflation run over 2% for an extended period moving forward. 

If these predictions come to pass, the implications for the USD are likely to be severe. Essentially, we will be entering a new age of inflationary expectations and a revaluation of the USD. While pumping the markets with QE and bumping inflation higher may further a COVID-19 recovery, the long-term impacts remain to be seen. Only time will tell how an aggressively dovish FED will sway USD values vs the majors.

Bullish Breakout In The GBP/USD Today’s Highlight For The Majors

After a sluggish Monday, the past two sessions have been big for GBP/USD bulls. Rates are back above 1.3200 and pushing higher.

Going into tomorrow’s Jackson Hole conference, there’s one level on my radar for this pair:

• Resistance(1): Triple Top, 1.3249-67

Bottom Line: If we see an exceedingly dovish Jerome Powell on Thursday, be on the lookout for the USD to fade versus the majors. Should this scenario unfold, a shorting opportunity from topside resistance may come into play.

Until elected, I will have sell orders for the GBP/USD queued up from 1.3248. With an initial stop loss at 1.3276, this trade produces 28 pips on a standard 1:1 risk vs reward ratio.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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