EUR/USD, GBP/USD resume their descents on greenback strength while EUR/GBP rallies
Outlook on EUR/USD, GBP/USD and EUR/GBP as the US Senate passes the debt ceiling bill.
Last week’s EUR/USD rally was short-lived
Last week EUR/USD managed to bounce off its two-month low at $1.0636 to Friday’s high at $1.0779 as the US agreed to raise its debt ceiling. The cross came off again amid stronger-than-expected Non-Farm Payrolls data with last week’ slow at $1.0636 being back in sight on Monday.
Potential support above this low comes in along the March-to-June tentative uptrend line at $1.0642. Failure at $1.0636 on a daily chart closing basis would lead to the January and March lows at $1.0516 to $1.0484 being back in the frame.
Minor resistance sits at the 26 May low at $1.0702 and more important resistance along the May-to-June downtrend line at $1.0765.
EUR/GBP recovers from its five-month low at £0.8568
EUR/GBP's slide to levels last traded in December of last year, to £0.8568 last week, on softer Eurozone headline and core inflation data, is giving way to a recovery rally.
Potential upside targets are the 11 and 24 May lows as well as the May-to-June downtrend line at £0.8649 to £0.8694. This resistance zone is likely to stall any bounce as the European Central Bank’s (ECB) tightening expectations seem to be diminishing and those of the Bank of England (BoE) remain in play.
Major support continues to be seen between the September-to-December lows at £0.8572 to £0.8548.
GBP/USD slips on US dollar strength
Last week’s GBP/USD swift recovery off its $1.2345 to $1.2309 April-to-May support zone on expectations that the US Federal Reserve (Fed) will not raise rates at its June meeting while the BoE is still expected to do so, took the cross to $1.2544 before it resumed its descent.
As the US dollar is once again appreciating, GBP/USD is seen tumbling towards its March-to-June uptrend line at $1.2363, below which lies key support at $1.2345 to $1.2309. If fallen through on a daily chart closing basis, a medium-term top would be formed with the 200-day simple moving average (SMA) at $1.12 representing a possible downside target.
Immediate resistance can be spotted around the 55-day SMA at $1.2438 and at the 24 May high at $1.2469.
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