EUR/USD, GBP/USD and EUR/GBP Forecasts – US Dollar Continues to Fight Back on Friday

EUR/USD Technical Analysis

The Euro has started to drift a little bit lower again during the Friday session as it looks like we are in fact going to see more continuation of this consolidation. That was my base case a few days ago; if you had been watching then, I don’t think we would have broken out. I think we don’t have anywhere to be.

So, 1.18 I think continues to be a ceiling that extends about 50, maybe 75 pips. And then the floor is probably 1.15, maybe 1.14. With this being the case, I do think that we start to drift lower, and in fact, that’s already starting to happen. So, I am bearish, short-term. In the intermediate term, I’m probably neutral. Longer term, I think I’m still bearish, but that obviously can change in a few months.

GBP/USD Technical Analysis

The British pound looks very much the same in the sense that it can’t break over the recent ceiling at 1.34, so with that being said, I think you have a scenario where we could start to fade a bit. I mentioned yesterday that if we could break down below the Wednesday lows, I think this thing starts to unravel. We go down to the 1.32 level and then 1.30. I still believe that’s the case. However, if we can break above 1.35, then obviously something changed, and it’s very likely we’re going higher.

EUR/GBP Technical Analysis

With the price action that we’ve seen in both the Euro and the pound against the US dollar, they are doing almost nothing against each other. We are sitting at a support level in the form of 0.8750, which continues to be important. It had previously been significant resistance, and now we’re trying to figure out whether or not the breakout and the pullback lead to a rally towards 0.89, or if we break down.

If we break down below 0.87, then I think the market will probably unravel a bit, maybe goes looking for the 200-day EMA. But as things stand right now, this is a neutral with a slightly bullish connotation to it. But really, this is more short-term trading back and forth than anything else.

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