EUR/USD, EUR/GBP and GBP/USD near support amid optimism around US debt ceiling
Outlook on EUR/USD, EUR/GBP and GBP/USD as progress in US debt ceiling negotiations is made.
EUR/USD probes key support
EUR/USD two-week descent on the back of a rising greenback due to flight-to-quality flows has taken the cross to a key support zone which is expected to hold.
It is made up of the 10 April low at $1.0832, the mid-February high at $1.0804 and the early April low at $1.0789. A recovery from that area is expected to take shape as an agreement on the US debt ceiling draws closer.
Minor resistance can be spotted at last week’s $1.0848 low. Above it the 55-day simple moving average (SMA) at $1.0867 may also act as resistance. A rise and daily chart close above the one-month downtrend line and Tuesday’s high at $1.0904 is needed, for a bullish reversal to unfold.
EUR/GBP tries to stabilise
EUR/GBP is still trying to find support around last week’s low at £0.8662. Friday’s UK Gfk consumer confidence for May could trigger a move out of the recent sideways trading range. A fall through £0.8862, last traded in December of last year, may provoke a sell-off towards the £0.8548 December low.
A bullish reversal above last week’s high, the one-month downtrend line and 200-day SMA needs to happen for the cross to head back up again. These levels come in at £0.8734 to £0.8744.
Further up the late February low at £0.8755 may stall an attempt of a move higher taking place, together with the early May low at £0.876.
GBP/USD remains under pressure amid ongoing US debt ceiling negotiations
GBP/USD recovery rally from Friday’s $1.2445 low stalled at $1.2546 on Wednesday following worse-than-expected UK unemployment data.
The cross has since resumed its descent towards the $1.2387 to $1.2345 zone. This area is made up of the mid- to late April lows and should offer good support. Support below $1.2345 lies at the mid-February high and early April low at $1.2275 to $1.227.
Only a currently unexpected bullish reversal, rise and daily chart close above Wednesday’s $1.2546 high could lead to the late April high at $1.2584 being reached.
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