EUR/USD, GBP/USD and EUR/GBP Forecast – US Dollar Somewhat Stronger in Early Trading

EUR/USD Technical Analysis

The euro has dropped a bit during the early hours here on Tuesday as the market continues to pull back from the 50-day EMA. All things being equal, this is a market that I think could find itself working towards the 1.1533 level. If we break down below there, the market could very well go down to the 1.14 level. The 1.14 level is an area where the 200-day EMA finds itself. That means I think this area ends up being pretty significant support.

Therefore, it makes a strong target. You’ll notice that since the FOMC meeting, the United States dollar has continued to climb against the euro and the euro has fallen against the dollar. And we even broke through a somewhat significant trend line. We bounced enough to test that trend line and then failed. We’ll just have to see how this plays out. But so far, it looks like the sellers continue to pressure the euro.

GBP/USD Technical Analysis

The British pound is starting to roll over slightly from the 50-day EMA as well. Although bearish, I wouldn’t worry too much about it because we’re basically in the middle of the overall consolidation. So, therefore, we’re essentially at fair value. I do favor the US dollar over the pound. Although the British pound is a little bit of an outlier considering how it performs against the US dollar, even as we were falling during 2024, it was falling less rapidly against the greenback than many other currencies. Conversely, on the way back up, the British pound was one of the best performers. So it’s got a history of fighting the dollar a little bit more. So although it does look weaker than strong, I’m not overly concerned. I think we will stay in this range for the time being.

EUR/GBP Technical Analysis

And finally, when it comes to triangulation between the euro, the pound, and the dollar, it makes sense that the euro and the pound look pretty much the same. That’s because they’re pretty neutral towards each other. The euro is currently sitting right out of the 50-day EMA against the British pound, right in the middle of a larger consolidation area.

I think this is essentially trying to tell us something important, and that’s where the dollar goes, which will dictate where everything moves in the first two pairs in this analysis. This is about the dollar and not really about the pound and the euro. There is no strength in the euro versus the pound or vice versa. Over the longer term, the euro has risen quite nicely, but going back to the last three months or so, we’ve been pretty sideways between 0.86 and 0.8750. I don’t see that changing anytime soon.

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