Rout in EUR/USD and GBP/USD continues while EUR/GBP is losing upside momentum
EUR/USD and GBP/USD continue to slide as the greenback is boosted by the prospect of rapidly rising US rates while EUR/GBP’s rally is slowing down post-French presidential election.
Rout in EUR/USD continues
Last week’s EUR/USD's rejection by the minor $1.0933 to $1.0945 resistance zone provoked a sell-off with the cross now trading at levels last seen in March 2020 amid worries of soaring inflation, supply issues to do with Chinese lockdowns and the global cost of living crisis.
The rout in the pair thus continues despite centrist incumbent Emmanuel Macron having beaten his far-right rival Marine Le Pen in the second round of the French presidential election by a wide margin.
The March 2020 low at $1.0638 is now in focus and will remain so, while the 28 March low and early April highs at $1.0923 to $1.0945 aren’t bettered. Immediate resistance today comes in at the $1.0806 March low and also at the 8 April $1.0837 trough.
EUR/GBP’s rally slows down ahead of the 200-day simple moving average at £0.845
EUR/GBP's rally off the mid-April low at £0.825 low is losing upside momentum while approaching the 200-day simple moving average (SMA) at £0.845, around which it may pause. This comes as the incumbent president Emmanuel Macron won the French election with 58.6% of the vote amid a weaker pound sterling.
Above the 200-day SMA the mid-March high can be spotted at £0.8458 and the late March peak at £0.8512.
Slips should find support around the 11 April high at £0.838 and further down along the 55-day SMA at £0.8359 as well as at the 28 March low at £0.8322 and also at the 8 April low at £0.8308.
GBP/USD continues to free fall
GBP/USD's swift decline is ongoing with it having fallen through the $1.2855 to $1.2813 support zone, made up of the June 2020 high and November 2020 low, and practically having reached the February 2020 low at $1.2726 on the back of the market pricing in more rapidly rising US than UK rates.
The April 2020 highs and September 2020 low at $1.2676 to $1.2644 are thus in focus and are expected to offer at least interim support. If not, we would have to allow for the September 2019 high at $1.2582 to be reached.
Resistance is now a long way off and can be spotted between the March and mid-April lows at $1.2973 to $1.3001. A currently unexpected bullish reversal and rise above the two-month downtrend line and last reaction high at the 21 April peak at $1.309 is needed, for the current bearish bias to be invalidated.
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