EURUSD GBPUSD EURGBP – Currency Markets Favor USD Early on Wednesday

EUR/USD Technical Analysis

The euro has fallen a bit during the trading session here on Wednesday, as market participants continue to look at the 1.18 level as an area of extreme resistance. At this point, it makes a certain amount of sense mainly due to the fact that we have an ECB meeting on Thursday, and that, of course, will have a major influence on what happens with the euro overall.

The possibility that the Federal Reserve is not going to cut rapidly is starting to weigh upon the euro. There is also a very real world in which the Europeans have to cut again. With all of that being said, we may be looking at a continuation of the range that we have been in since July, between 1.14 and 1.18.

GBP/USD Technical Analysis

The British pound has fallen significantly, which makes a certain amount of sense considering that the 1.34 level has been an important area more than once. With that being the case, this is an area that could cause some trouble. Furthermore, we also have to keep in mind that on Thursday, we have a Bank of England interest rate decision.

People do expect the Bank of England to either cut rates by 25 basis points or come very close. The official count was very close last time, so it is somewhat of a done deal. The real question will be whether England looks like it is going to continue to cut.

EUR/GBP Technical Analysis

The euro rallied against the British pound initially during the session but then fell back to the 0.8750 level. Looking at the longer-term charts, there is a real argument that the market is in the midst of changing the trend again and could drop rather precipitously. With both central banks in play on Thursday, this is going to be a very choppy and potentially dangerous pair.

If the market can break down below the 0.87 level, it sets up for a longer-term short. On the other hand, if we rally from here, the 0.8850 level is significant resistance, followed by 0.89. With that being said, the market will likely remain noisy, but a bigger move is in the works.

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