GBP/USD RSI Flirts with Overbought Territory- Retail FX Remains Short

Talking Points:

- GBP/USD Retail Crowd Remains Net-Short Despite Fresh 2015 Highs.

- USD/CAD Preserves Bearish Momentum Ahead of Canada CPI, Retail Sales.

- USDOLLAR Bearish Formation Takes Shape on Dovish FOMC.

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GBP/USD

Chart - Created Using FXCM Marketscope 2.0

• GBP/USD climbs to a fresh 2015 high (1.5929) as U.K. Retail Sales showed an unexpected 0.2% rise in May; pair may continue to retrace the decline from back in July 2014 amid the tightening race between the Bank of England (BoE) & the Federal Reserve to normalize monetary policy.
• May see a further advance in the days ahead as the Relative Strength Index (RSI) pushes into overbought territory, with a break/close above .15940 (61.8% expansion) opening the door to the 1.6000 handle.
• DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short GBP/USD from June 16, with the ratio working towards extremes as the ratio slips to -1.44.

USD/CAD

• USD/CAD may continue to give back the advance from May as the pair carves a bearish channel, while the RSI preserves the bearish momentum from earlier this month.
• Even though Canada Retail Sales are projected to increase another 0.7% in April, a slowdown in the core Consumer Price Index (CPI) may dampen the appeal of the loonie as it raises the Bank of Canada’s (BoC) scope to retain a wait-and-see approach for an extended period of time.
• Need break/close below the Fibonacci overlap around 1.2110 (61.8% retracement) to 1.2130 (23.6% retracement) to favor a run at the May low (1.1918).

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Read More:

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British Pound Forecast to Gain on Material Shift in Positions

USDOLLAR(Ticker: USDollar):

Chart - Created Using FXCM Marketscope 2.0

• Dow Jones-FXCM U.S. Dollar remains at risk for a further decline following the more dovish tone from the Federal Reserve especially as price & RSI carve out a bearish formation.
• Dollar may face additional headwinds over the near-term amid the growing risk for a further delay in the Fed’s normalization cycle; the ongoing weakness in the U.S. Consumer Price Index (CPI) may become a growing concern for the central bank as it struggles to achieve the 2% target for inflation.
• A closing price below the Fibonacci overlap around 11,721 (38.2% expansion) to 11,745 (50% retracement) raise the risk of seeing a move back towards the May low (11,634).

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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