EUR/USD, GBP/USD and EUR/GBP Forecast – US Dollar Continues to Lead the Pack

EUR/USD Technical Analysis

The euro has been a little bit noisy during the trading session here on Wednesday as we continue to threaten a support level that has been important a couple of times already in the form of the 1.1550 level. If we can break down below that level, then it’s likely that the Euro will drop to the 1.14 level, with the 200-day EMA hanging around that same area for a bit of support. A short-term rally at this point opens up the possibility of a test of the 50-day EMA, which is right at 1.1663. Anything above there starts to get interesting, but this looks like a “fade the rally” market still.

GBP/USD Technical Analysis

The British pound continues to drift lower against the US dollar, and you can see that we topped out in this market after the FOMC meeting. We just haven’t gotten much better since then. It looks like the 200-day EMA could be targeted near the 1.3275 level. A breakdown below there then opens up the possibility of 1.322. So, all things being equal, this is a market where I think you continue to see short-term rallies that show signs of exhaustion with a 50-day EMA, possibly opening up a bit of a barrier.

EUR/GBP Technical Analysis

The Euro initially did take off to the upside against the British pound, but it’s given back quite a bit of the gains. I think the Euro is going to continue to simply hang around the 50-day EMA. As we are in the middle of this overall 150-point range, I think it makes sense. It shows balance. It shows that neither of these currencies shows extreme strength against the US dollar and therefore, I think they both continue to go lower against the US dollar.

I haven’t seen a clear winner here over the last couple of months. But it is interesting to note that the euro is in the process of testing a very important level against the pound. So I think short-term rallies probably continue to get faded all the way up to the 0.8750 level. Anything above that changes everything, but right now, I think the US dollar is obviously the big winner out of these three currencies.

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