EUR/USD, GBP/USD and EUR/GBP Forecast – Currencies See USD Trying to Fight Back Early

EUR/USD Technical Analysis

The euro initially tried to break above the 50-day EMA during early trading on Tuesday, but we continue to see overhead pressure. I think there’s plenty of resistance all the way to the 1.18 level, and as a result, the market will more likely than not continue to see rallies fade.

Those faded rallies are signs of exhaustion that I’m willing to jump on. We do have CPI numbers coming out, but unless something changes drastically, I think you still have a situation where the US dollar is signaling it’s not giving up.

GBP/USD Technical Analysis

The British pound, of course, is looking very much like a market that is going to respect the 1.35 level as a magnet for price, but also for a barrier that extends possibly all the way to the 1.36 level.

With this being the case, I think you look at short-term rallies that show signs of exhaustion, like we are seeing early in the day, as a potential selling opportunity. I do believe the US dollar is turning the corner, and with that being the case, you have to look at this through the prism of a market that you are fading as it shows signs of exhaustion. If we break above the 1.36 level, that invalidates everything.

EUR/GBP Technical Analysis

The euro continues to drift lower against the British pound, but we’re sitting right here at the 200-day EMA. It’ll be interesting to see if we can break down below there, because if we do, I think it opens up the door to 0.86, and then after that, much lower, maybe 0.84.

This is not a quick-moving pair, but when you look at the euro against the dollar, and you look at the British pound against the dollar, you can definitely see that the British pound is less bad. And that’s what I’m trading here. The ECB is already pretty low with its rates, and it’s not going to do anything, but the Bank of England, despite the fact that it just cut its rates, looks very much like it’s going to be hesitant to do so aggressively. I still like the downside here; I like fading rallies; I like shorting this pair below the 200-day EMA.

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