EUR/USD, GBP/USD and EUR/GBP Forecasts – US Dollar Slumps Early on Monday

EUR/USD Technical Analysis

The Euro rose slightly during the trading session here on Monday as we continue to see a lot of back and forth in this pair, but when I look at the Euro against the US dollar in general, we are basically near the top of the overall consolidation, and this time of year does not typically lend itself to having huge moves.

So, I do not think this is a big deal; I think we are just hanging around here trying to find a direction. I think with the central bank outlook of both central banks—the European Union’s European Central Bank and the United States Federal Reserve—neutrality makes a lot of sense. Therefore, I am fading short-term rallies that show signs of exhaustion near the 1.18 level.

GBP/USD Technical Analysis

The British Pound has rallied quite nicely and looks strong for the day, but it is in the same cluster it has been in for a couple of weeks. So we will have to see how this closes out, but if you can get a daily close above 1.35, then the Pound may have somewhere to go to the upside, maybe 1.37.

The market will continue to be very choppy and very noisy, but ultimately, I think this is a market that you have to watch what happens in the bond markets between UK Gilts and the US Treasury markets; you have to watch the interest rate differential. Right now, it looks like people are favoring the British Pound, but we have not been able to clear this area, and that is something worth paying attention to.

EUR/GBP Technical Analysis

The Euro has fallen against the British Pound, which is not a huge surprise when you compare them both against the US dollar on Monday. But we are still hanging onto this support level right around the 0.8750 level, so if we can break down below 0.87, then we could see this pair drop. I think eventually that might be what plays out here, as we are at an extreme high over the last couple of years, and this pair does like to be very range-bound over longer periods of time. If we rally at this point, the 0.88 level could be a target; anything above there could open up 0.8850.

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