EUR/USD, GBP/USD and EUR/GBP Forecast – Currency Markets Calm in Early Friday Trading

EUR/USD Technical Analysis

The euro has been back and forth and rather choppy during the trading session here on Friday in the early hours, as we continue to see a trend line play out, offering major resistance. The 50-day EMA sitting just above also offers a bit of a barrier and a ceiling, so I’m more apt to fade short-term rallies in this market and believe that we will eventually test the 200-day EMA, possibly even the 1.14 level. If we were to break down below the 1.14 level, the euro could trade down to 1.11.

GBP/USD Technical Analysis

The British pound had initially followed the same trajectory, falling right away on Friday, only to turn around and show signs of life. At this point in time, it looks like we are trying to carve out some type of consolidation area, as the market has been bouncing around between the 1.30 and 1.32 levels as of late. It’s worth noting that the 50-day EMA is getting ready to cross below the 200-day EMA, kicking off the so-called Death Cross, which, of course, is bearish longer term. If we do in fact break down below the 1.30 level—and I think that does happen eventually—it opens up the door to a move down to the 1.2750 level for the British pound.

EUR/GBP Technical Analysis

The euro initially tried to rally against the British pound but turned around to show signs of weakness again. Ultimately, this is a market that I think is going to continue to be very choppy, and therefore, you have to look at it through the prism of a range-bound type of situation, with short-term pullbacks perhaps offering buying opportunities. The 0.8750 level is an area that previously had been significant resistance, so I think you have to look at it as market memory just waiting to happen in the form of support.

The 50-day EMA sits there as well, so that, of course, helps. I look at this as a market that gives us an opportunity on these dips to pick up cheap euros. I don’t look for an explosive move, but I do think the measured move of the previous consolidation, suggesting 0.89 as a target, is pretty reasonable, but this pair tends to move at a snail’s pace.

For a look at all of today’s economic events, check out our economic calendar.