EUR/USD, GBP/USD and EUR/GBP Forecast – US Dollar Shows Strength Early Thursday

EUR/USD Technical Analysis

The Euro initially tried to rally during the trading session on Thursday but gave back gains as we are waiting for an ECB announcement. Quite frankly, they are not expected to do anything, so I think most of what we’ve seen will have played out due to the Federal Reserve press conference and statement that occurred on Wednesday. The market has been bouncing around 1.17 at the top and 1.1550 at the bottom.

Ultimately, this is a market that, if and when we break out of there, gives you the direction where we are going to start heading. The 1.18 level above is resistance, and the 1.14 level underneath is support with the 200-day EMA. All things being equal, this is a market that I think continues to favor the US dollar. So even if we get a knee-jerk reaction to the upside, I think you have a scenario where you’re still looking to fade rallies.

GBP/USD Technical Analysis

The British pound initially tried to rally a bit during the session here on Thursday to test the 1.32 level, only to turn around and start falling again. All things being equal, if we break down below the lows of the trading session from Wednesday, it opens up a move down to the 1.30 level, possibly even the 1.28 level. We are below the 200-day EMA and therefore technically in a downtrend, but this 1.13 area will continue to be a bit of support.

EUR/GBP Technical Analysis

The euro continues to grind to the upside against the British pound and has shown a bit of hesitation. Ultimately, this is a market that I think is probably due to a short-term pullback, but keep in mind the 0.8750 level has been previous resistance and should now end up being support on the way back down. The 50-day EMA is near the 0.87 level and rising, and I do think it comes into effect as support also. The measured move of the break above the consolidation area opens up a move to the 0.89 level, as it is a 150-pip range that we had been in, and it just extrapolates to that 0.89 level. Ultimately, I’ve got no interest whatsoever in shorting this market—I think a pullback just invites more buying.

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