EUR/USD, GBP/USD and EUR/GBP Forecasts – Euro and Pound Continue to See Volatility

EUR/USD Technical Analysis

The Euro has tried to rally a bit during the early hours on Tuesday but has given back some of the gains near the 1.18 level as we continue to see the Euro look very lackluster. The 1.1850 level above, I think, needs to be cleared for momentum to go higher near the 1.20 level, maybe 1.2050.

If we break down below the bottom of the range for the last couple of days, then it opens up the possibility of a move down to the 1.16 level. Quite frankly, the Euro has been very lackluster as of late as the ECB is sitting on the sidelines and there’s a lot of questions as to what is going on with monetary policy in the United States. It’s not as clear cut as a lot of people had hoped for.

GBP/USD Technical Analysis

The British pound continues to be fairly lackluster as well as we are sitting right around the 1.35 level and the 50-day EMA sits just above there for a certain amount of resistance that will be very difficult to overcome.

With that being said, I think you have to look at this through the prism of a market that remains fade the rally, probably more so than the Euro. But I do think that recently there were headlines about all of the usual suspects saying that it was the end of the US dollar. There was a 14-year high in short positioning against the US dollar and that was right about as everything turned around as per usual. I do expect to see some negative follow-through sooner or later.

EUR/GBP Technical Analysis

Finally, the Euro against the pound, it’s not a huge surprise that the Euro has been gaining as of late, but the 0.8750 level continues to be a pretty significant barrier. If we can break above that, it does open up the possibility of going to the 0.88 level.

I use this chart for a process called triangulation. If this market suddenly falls apart, meaning that the Euro drops against the pound and the US dollar is strengthening, I want to short the Euro against the dollar.

On the other hand, if the US dollar is falling and you see the British pound beating up on the Euro, then you want to buy pound dollar. I use it as probably a tertiary indicator, but it gives you an idea of which one of the two currencies is going to either outperform or underperform.

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