EUR/USD, USD/CHF and GBP/USD Forecasts – US Dollar Drifts Lower in Europe

EUR/USD Technical Analysis

The Euro has gapped higher against the US dollar as traders are perhaps trying to react to the idea that maybe peace could happen in the Middle East. I don’t know. I think this is a situation where we’ve heard this story before and yes, of course, eventually there will be some type of agreement and there is talk that the strait will be open and everything else, but the reality is we’ve been down this road before and until something actually concrete happens, I’d be very hesitant to get really big in a position.

In fact, I’m willing to say that there’s a really good chance this ends up being a selling opportunity. That being said, it’s a holiday, so the volume of course was a lot lower. I’d be more interested somewhere around 1.1750 to start shorting if we show signs of exhaustion.

USD/CHF Technical Analysis

The dollar has fallen against the Franc again. I don’t know that I read too much into this on a holiday. I’m looking at the 61.8% Fibonacci retracement level, or basically 0.7775, as a potential bounce play to start buying the dollar again and collecting that swap. Yes, the interest rates in the US have dropped a little bit over the last couple of trading sessions, but you can still drive a truck through the interest rate spread between the United States and Switzerland and therefore I think ultimately that will win the day.

GBP/USD Technical Analysis

The British pound gapped higher and out of all of the currencies that I’m looking at in this video, this is the 1 that makes the most sense. The interest rate in the UK is slightly higher, and of course, it’s been a more resilient currency to begin with. If you remember, back when all of the tariff noise started, the UK was 1 of the first major economies to have an agreement with the United States. It’s avoided that entire mess and now finds itself at a large, round, psychologically significant number.

If we can continue to go higher, I think what we’re looking at is probably a grind to the 1.36 level. If the US dollar starts strengthening everywhere, it will have an influence here, but I’d rather short the Euro or buy the dollar against the Frank than short the Pound. It’s just been more resilient.

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