GBP/USD Tests Support At The 20 EMA

British Pound Is Moving Lower Against U.S. Dollar

GBP/USD is currently trying to settle back below the support at 1.3535 while U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index is stuck near the 96 level. In case the U.S. Dollar Index manages to settle above this level, it will move towards the resistance at 96.25 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on general market sentiment and the dynamics of U.S. government bond markets.

The market sentiment is currently driven by fears about escalation of the conflict between Russia and Ukraine, which is bullish for safe-haven assets like U.S. dollar and gold.

Meanwhile, Treasury yields have started to move higher after the recent pullback as traders remain worried about high inflation. The yield of 10-year Treasuries is currently trying to settle above the 1.95% level. In case this attempt is successful, it will move towards the 2.00% level which will be bullish for the American currency.

Technical Analysis

GBP/USD declined below the support level at 1.3550 and is testing the next support at the 20 EMA at 1.3535.

If GBP/USD manages to settle below the 20 EMA, it will head towards the support level which is located at the 50 EMA at 1.3510. A move below the 50 EMA will push GBP/USD towards the support at 1.3490. In case GBP/USD declines below this level, it will head towards the support level at 1.3465.

On the upside, the previous support at 1.3550 will serve as the first resistance level for GBP/USD. If GBP/USD gets above this level, it will head towards the resistance at 1.3575.

A successful test of the resistance at 1.3575 will open the way to the test of the next resistance at 1.3600. If GBP/USD manages to settle above 1.3600, it will head towards the resistance level which is located at 1.3625.

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