Outlook on EUR/USD, EUR/GBP and GBP/USD as Eurozone hints at stagflation
Outlook on EUR/USD, EUR/GBP and GBP/USD as slowing growth and sticky inflation in the Eurozone hint at stagflation.
EUR/USD tries to regain its 200-day simple moving average
EUR/USD’s slide is trying to stabilise above its August $1.0766 low and regain its 200-day simple moving average (SMA) at $1.082 as a cooling US labour market points towards a possible end to the Federal Reserve's (Fed’s) tightening cycle and weighs on the US dollar.
If the moving average were to give way, the July low at $1.0834 would be next in line ahead of the 24 August high at $1.0876.
Were the August trough at $1.0766 to be slipped through, the May low at $1.0636 would represent the next lower significant downside target.
EUR/GBP trades in low volatility
EUR/GBP’s recovery from its one-year August low at £0.8493 took it to £0.861 before the cross headed back down again as stagflation emerges in the Eurozone. Growth is slowing while inflation remains sticky, pushing the euro down as further rate hikes in such an environment look less likely than before.
The late-July low at £0.8545 may be revisited on Monday but is likely to offer at least interim support. While this is the case, a rise back towards the 55-day SMA at £0.8585 may ensue.
Below £0.8545 sits key support between the £0.8522 to £0.8504 June and July lows.
GBP/USD find support above $1.2549 August low
GBP/USD’s descent has so far taken it to last week’s $1.2549 August low above which the cross is trying to stabilise as the US dollar retreats amid a cooling US labour market and lower odds of another rate hike being seen in this cycle.
Provided the $1.2549 level underpins, the July-to-September downtrend line at $1.2709 remains in sight.
While next higher resistance at $1.2819 isn’t bettered, however, the medium-term trend remains bearish.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
