The surging US dollar isn't helping to provide much support for cable at the moment as the drop extends for a fourth straight week. We're now hitting levels below 1.2200 for the first time since May 2020.
And the worst part is that there still isn't much room for reprieve until we get towards 1.2000 perhaps. I outlined the situation for the pound earlier in the week:
"Despite some technical indications that cable may be oversold, it's tough to fight the momentum in the pair at the moment. The plain divergence between the Fed and BOE is already making for a compelling trade but when you add in a selloff in markets in opting for cash, that is fueling a further run higher in the dollar.
As things stand, there is just no catching the falling knife in cable at the moment. But the pair might be able to find some reprieve soon enough closer to the May 2020 low @ 1.2075 and if not, the 1.2000 handle. The latter in particular is the key one to watch for support in the pair."
There's pretty much no change to that outlook and even though it has been rather one-way traffic and a whopping 900 pips, there still could be a bit more downside for cable to go - for now at least.
