The markets are still very slow and choppy in tight ranges, so our view remains unchanged. We think that FX pairs are forming just a corrective price action within larger trend against the USD.

On the USD index hourly chart below we see a three wave rally from 80.13 within two parallel trend lines which we think its a contra-trend move; a-b-c. Notice that in wave c we also have a wedge pattern which looks like an ending diagonal. Ending diagonals are reversal pattern, so if we are correct then USD Index should turn bearish. Decline is expected to accelerate after a break of lower support line and 80.48 swing low.

Based on USD Index bearish outlook the majors are expected to rally, particularly EUR, GBP, and CHF.

On GBPUSD we see a potential low in place of a three wave decline from 1.6160 to 1.5952 where pair may have completed a wave c leg of a contra-trend movement. Based on the latest price action immediate rise to 1.6044 and ideally 1.6086 is expected while 1.5952 holds. 1.5950 level should represent a stop loss to any intra-day long set-ups.

Forex Analysis by Gregor Horvat at ForexPros. com