EUR/USD at Risk of a Fall to sub-$1.015, as the GBP/USD Struggles

Following July inflation figures on Wednesday, it is a quiet day ahead for the Pound and the UK economic calendar. There are no UK economic indicators for the markets to consider. There are also no scheduled Monetary Policy Committee member speeches to provide direction.

The lack of stats and MPC member chatter leaves the Pound exposed to any unscheduled MPC member comments to the media and market risk sentiment.

For the EUR, finalized Eurozone inflation figures for July will draw interest later this morning. With little else for the markets to consider on the economic calendar, expect EUR sensitivity to any revisions.

EUR/USD Price Action

At the time of writing, the EUR was down 0.15% to $1.01629.

Technical Indicators

The EUR/USD needs to move through the $1.0175 pivot to target the Wednesday high of $1.02029 and the First Major Resistance Level (R1) at $1.0206.

A pickup in appetite for riskier assets and an upward revision to the finalized inflation figures would support a return to $1.020.

In the event of an extended rally, the EUR/USD pair could test the Second Major Resistance Level (R2) at $1.0233 and resistance at $1.0250.

The Third Major Resistance Level (R3) sits at $1.0291.

A fall through the pivot would see the EUR/USD test the First Major Support Level (S1) at $1.0148.

In case of an extended sell-off, fueled by weaker CPI numbers and risk aversion, the EUR/USD pair could test the Second Major Support Level (S2) at $1.0118 and support at $1.0100.

The Third Major Support Level (S3) sits at $1.0060.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. Following Wednesday’s bearish cross, the EUR/USD sits below the 50-day EMA, currently at $1.02061. The 50-day and the 100-day EMAs pulled back from the 200-day EMA, delivering bearish signals.

A move through R1 ($1.0206) and a breakout from the 50-day EMA and the 100-day EMA (1.02122) would support a run at R2 ($1.0233).

However, a further pullback from the 50-day EMA would leave the Major Support Levels in play.

GBP/USD Price Action

At the time of writing, the Pound was down 0.20% to $1.20223.

Technical Indicators

The Pound needs to move through the $1.2072 pivot to target the First Major Resistance Level (R1) at $1.2117 and the Wednesday high of $1.21424.

With no economic indicators for the markets to consider, the Pound would need a pickup in appetite for riskier assets to support a return to $1.21.

In the event of an extended rally, the GBP/USD pair could test the Second Major Resistance Level (R2) at $1.2187 and resistance at $1.22.

The Third Major Resistance Level (R3) sits at $1.2302.

Failure to move through the pivot would see the Pound test the First Major Support Level (S1) at $1.2002 and support at $1.20.

In case of an extended sell-off fueled by risk aversion, the GBP/USD pair could test the Second Major Support Level (S2) at $1.1957 and support at $1.1950.

The Third Major Support Level (S3) sits at $1.1842.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The GBP/USD sits below the 50-day EMA, currently at $1.21010.

The 50-day crossed through the 100-day EMA, with the 50-day and the 100-day EMAs pulling back from the 200-day EMA. The bearish cross of the 50-day EMA through the 100-day EMA brings S1 ($1.2006) into play.

However, a GBP/USD move through the 50-day EMA ($1.21010) and the 100-day EMA (1.21023) would support a run at R1 ($1.2117) and the 200-day EMA ($1.21176).

The US Session

Following the better-than-expected core retail sales figures on Wednesday and the FOMC minutes, the market attention will shift to manufacturing and labor market conditions.

An unexpected spike in jobless claims and a fall in the Philly Fed Manufacturing Index would test the appetite for riskier assets and drive demand for the dollar. A worse case scenario would nudge the DXY towards 107.

The FOMC minutes revealed a more dovish stance on monetary policy, albeit marginally. However, market jitters over the economy leave the EUR and the GBP susceptible to flight-to-safety moves.