EUR/USD, GBP/USD and USD/CHF Forecasts – US Dollar Drifts Lower as Rates Drop

EUR/USD Technical Analysis

The euro initially pulled back just a touch in early trading on Tuesday but has since bounced quite nicely to go looking to the 200-day EMA. I still believe that there’s an area that we are approaching right around the 1.1650 level that could cause some resistance.

I’ll be watching that very closely, especially if it coincides with rates in the United States turning higher. Otherwise, if we can break the 1.17 level, then I think that opens up the next 100 pips to the upside.

GBP/USD Technical Analysis

The British pound initially pulled back at the open on Tuesday but then turned around to rally towards the 50-day EMA. The British pound, of course, is a bit stubborn against the US dollar these days as there is a slight interest rate differential favoring Great Britain, but not anything massive.

So, typically speaking, if the US dollar is in trouble, the pound does fairly well. If the US dollar strengthens, I tend to ignore this pair; I don’t wish to short the pound at this moment. We are basically right in the middle of a huge cluster of noise. I don’t expect easy movement in either direction.

USD/CHF Technical Analysis

The US dollar initially rallied against the Swiss franc but has since given those gains back as we are dancing around the crucial 200-day EMA. With that, I believe that the market is likely to perhaps find significant support underneath near the 0.79 level. I look at that as a potential floor.

It does make sense that we pulled back a bit; the 0.80 level caused a little bit of resistance previously. If those rates start to rise again in the United States, that could turn this market around. But quite frankly, this is a market that I think will continue to move on headlines coming out of the Middle East.

If you’d like to know more about how to trade forex, please visit our educational area.