EURUSD, GBPUSD & EURGBP Forecast – US Dollar Pushing Back Again

The US dollar looks as if it is going to try to recover against the recently selling pressures. At this point, the selling seems to be abating for the Greenback.

EUR/USD

EUR/USD daily candlestick chart. Source: TradingView.

The Euro initially tried to rally a bit during the trading session on Friday, but it continues to see the 1.18 level as a bit of a magnet. I’m very interested in this pair right now because it could be a microcosm of what’s about to happen to the US dollar around the world.

If we were to break down below the 50‑day EMA at the 1.1733 level, I think that confirms a false breakout and we are more likely than not enter the consolidation phase yet again, as we had been in it most of summer and fall as well as winter now.

This recent breakout, although somewhat interesting, truthfully has been squashed by the idea of Kevin Warsh being the next Federal Reserve Governor.

GBP/USD

GBP/USD daily candlestick chart. Source: TradingView.

The British Pound also looks a little lost here as it had tried to rally early in the session but has turned around to show signs of weakness. If we break down below here, we will probably go looking at the 1.36 level and then the 1.35 level where the 50‑day EMA sits.

Breaking above the 1.3750 level would be very bullish, but today’s price action throws another monkey wrench into the arena. It looks like it’s a situation where traders are going to have to continue to deal with this choppiness.

EUR/GBP

EUR/GBP daily candlestick chart. Source: TradingView.

The Euro has fallen a bit during the trading session on Wednesday only to turn and show signs of life. The 0.86 level is support and if we were to break down below there, then I think you’ve got a real negative move in the Euro, probably down to the 0.84 level.

Short‑term rallies at this point in time I still like selling on signs of exhaustion, and it is worth noting that we are below the 200‑day EMA at the moment.

While the European Central Bank is relatively flat with its monetary policy outlook, the Bank of England, although expected to cut down the road, is very stubborn about it. Therefore, it has put a little bit of a bid under the British Pound.