US Dollar pares gains on hopes of ceasefire; DXY, GBP/USD
As markets see a glimmer of hope that there may be a ceasefire ahead in the Russia/Ukraine war, the US Dollar is giving back some of its recent gains after trading to its highest level since May 2020. On Monday, the US Dollar Index reached an intra-day high of 99.42, after testing the top trendline of an upward sloping channel it has been in since May 2021, horizontal resistance, and the 161.8% Fibonacci extension from the highs of January 28th to the lows of February 4th. The RSI was also in overbought territory. Thus far today, the DXY is down nearly 1% and back in the long-term upward sloping channel.
Source: Tradingview, Stone X
Why the reason for optimism? Yesterday, Ukraine’s Zelensky said that he would no longer be insistent that Ukraine would apply for NATO membership. In addition, humanitarian corridors have finally been opened to allow aid to enter hard-hit cities and to allow citizens to leave. Today, Zelensky also said that he is ready for diplomatic solution and ready to discuss neutrality, as long as there are security guarantees.
One of the main beneficiaries of a weaker US Dollar is GBP/USD. The pair has been trading lower since reaching a high on May 31st, 2021, near 1.4250. After forming a wedge during November 2021, the pair made a near-term low of 1.3160 on December 9th, 2021 and bounced to test a downward sloping trendline that dates to July 29th, 2021. After failing to close above the trendline, GBP/USD resumed lower and on Monday, took out the December 9th, 2021 lows. Notice however, that the RSI was oversold, indicating the possibility for a pause or reversal.
Source: Tradingview, Stone X
First resistance on the 240-minute timeframe is at the February 24th and March 2nd lows near 1.3271. Above there, resistance is at the 38.2% Fibonacci retracement level from the highs of February 18th to the low of March 8th near 1.3296, then horizontal resistance and the 50% retracement level from the same timeframe at 1.3362. First support is at the March 8th low of 1.3082. Below there, GBP/USD can drop to the psychological round number support level of 1.3000, which is also the 127.2% Fibonacci extension from the lows of December 9th, 2021 to the highs of January 13th. Third support is the November 2, 2020 low of 1.2854. (see daily)
Source: Tradingview, Stone X
With hope and optimism that a ceasefire agreement between Russia and Ukraine can be reached, the DXY has moved lower and GBP/USD has gone bid. However, any negative headlines could cause the 2 assets to reverse. Note that both the FOMC and the BOE meet next week. The focus next week for GBP/USD may shift off the Russia/Ukraine conflict and onto the central bank meeting results.
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2025