GBP/USD extends correction to the 1.3530 zone

• US dollar gains momentum as market sentiment deteriorates.
• DXY up 0.40%, US 10-year yields back at 1.80%.
• GBP/USD is still bullish but facing strong resistance at 1.3600.

The GBP/USD dropped further from above 1.3600 and printed a fresh daily low at 1.3531. It remains near the lows, under pressure amid a stronger US dollar across the board.

The greenback benefit from deterioration in market sentiment and higher US yields. The Dow Jones is falling 1.40% and the Nasdaq tumbles 2.23%. Treasury bonds are not being helped from the risk aversion tone. With US yields holding near recent highs, DXY rose further. The index gains 0.40% and trades at 96.10.

Technical outlook

 “GBP/USD is trading in an uptrend, benefiting from upside momentum on the daily chart and surpassing the 50 and 100-day SMAs on its way up. For the scenario of a fall in the next month to materialize, it would need to break below this uptrend support line. Horizontally, 1.3480, 1.3430, and critically 1.3380 provide support. Further below, 1.3280 and 1.32 are eyed, before the December trough of 1.3175”, said Yohay Elam, Analyst at FXStreet.

On the upside, GBP/USD could face immediate resistance at 1.3565. Above the critical level continues to be the 1.3600 area. A consolidation above is needed to open the doors to more gains.

Technical levels