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.
A drop this week in cable will mark a fourth consecutive weekly fall and it will come after a sharp fall in the past three weeks - from 1.3000 to near 1.2300. The low today hit 1.2262, which is the lowest since June 2020.
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.
We're still some ways off that but it's getting harder by the day to chase further downside in the pair (mainly after an already sharp drop in April) unless the dollar continues to run hot across the board. While that is still largely plausible, we'll have to go step by step on the technicals to confirm that.
