The US dollar continued to advance against its forex counterparts at the end of the week, despite the profit-taking activity that occurred towards the end of the month

The short-term EMA has been moving below the long-term EMA on the same time frame, confirming that the downtrend is likely to carry on.

Price looks ready to test the channel resistance at the 1.5300 major psychological level, which might continue to keep further gains in check. If so, the pair could head back to he channel support at the 1.5200 major psychological mark. Stochastic is on its way down but is still pointing up, hinting that a few more gains are likely before the pair heads south.

However, if buyers soon take control of price action, the pair could climb past the channel resistance and eventually test the next potential ceiling at the 1.5350 minor psychological mark, which is at the long-term EMA. This indicator has held as a dynamic resistance level in the past and may do so again.

A break past the EMA might signal that a reversal is underway, putting further upside pressure on GBPUSD. This could push price up to the 1.5500 mark once more, depending on how this week’s market catalysts play out.

Event risks for this trade setup include the BOE interest rate decision on Thursday and the US non-farm payrolls report on Friday. The BOE is expected to maintain its neutral policy stance while still emphasizing that their next move is still likely to be a rate hike. Meanwhile, a strong jobs rebound is expected from the US but another disappointment could lead to a sharp dollar selloff.

By Kate Curtis from Trader’s Way