EUR/USD, GBP/USD and USD/CNH struggle for direction after recent dollar rebound
The dollar recovery looks to be stalling somewhat, with EUR/USD and GBP/USD consolidating as USD/CNH shows signs of a potential bearish reversal.
EUR/USD seeing mixed sentiment as the dollar resurgence eases
EUR/USD has seen a period of upside of late, with the price rising up towards the key $1.0704 swing high on Wednesday. The ability to maintain the downtrend in play over the course of the past month comes down to the pair reversing lower from there, which appears to have happened.
However, with the price regaining ground after a decline towards the $1.0565 level, the bearish confirmation signal has not emerged quite yet. As such, the current move higher needs to push through $1.0704 to bring about a positive outlook for the pair, with a decline through support remaining the likeliest outcome given the downtrend that continues to play out.
GBP/USD consolidation continues as price reverses from support
GBP/USD has been rangebound over the course of the past fortnight, with the price seemingly opting to maintain that pattern once again this morning. With the price having turned lower from the $1.2147 resistance level on Tuesday, we are now seeing the $1.1915 to $1.1922 support zone come into play here.
Today sees a focus on purchasing managers index (PMI) data, with UK final services and US Institute of Supply Management (ISM) services PMI figures providing potential drivers of volatility going forward. The wider trend does highlight expectations of a bearish breakdown when we do exit this current period of consolidation. However, the respect of this support level does bring the potential for a short-term rebound here.
USD/CNH at risk of rolling over after strong Chinese data
USD/CNH saw a fresh bout of strength overnight, following a fourth impressive PMI reading this week. This time it was the Caixin services PMI, which signalled the steepest rise in activity since last August.
With next week’s Chinese Parliamentary meeting expected to bring a strong 2023 growth target, there is a feeling that we could finally see the economy stage a meaningful recovery after their zero-Covid-19 led downturn. However, whether that will be enough to drive a major recovery for the Yuan remains to be seen, with a decline through CN¥6.8545 required to bring greater confidence of a bearish reversal here.
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