EUR/USD, EUR/GBP and GBP/USD as Fed Chair makes slightly hawkish remarks
Outlook on EUR/USD, EUR/GBP and GBP/USD amid hawkish Fed Chair comments and as the UK economy flatlines in the third quarter.
EUR/USD remains side-lined
EUR/USD's minor consolidation below Monday’s near two-month high at $1.0756 continues with it holding above its the 55-day simple moving average (SMA) at $1.0644, though, as the US Federal Reserve (Fed) Chair Jerome Powell leaves the door open for one possible last rate hike.
While the 55-day SMA holds, the medium-term bullish trend remains in play. Were it to be slipped through on a daily chart closing basis, the breached July-to-November downtrend line, now because of inverse polarity a support line, at $1.0588 could offer support.
Resistance is seen at Thursday’s $1.0725 high. Were it and Monday’s high at $1.0756 to be exceeded, the 200-day SMA at $1.0803 would be in focus, together with the $1.0834 July low.
EUR/GBP heads back up towards its £0.8754 late October peak
EUR/GBP is seen heading back up towards its £0.8754 late October high as the British economy stalls in the third quarter (Q3), the weakest performance in four quarters.
The 2 November high at £0.8735 and the 20 October high at £0.8740 are in the process of being tested, ahead of the recent £0.8754 peak. Further up lies the early May low at £0.876.
Good support remains to be seen between the July and September highs and the 200-day SMA at £0.8706 to £0.8689. While it underpins, upside pressure should remain in play.
GBP/USD bounce rejected by 55-day SMA
On Monday GBP/USD's rally faltered just below the 200-day SMA at $1.2435 and since then slid back towards the $1.22 region, having on Thursday’ been rejected by the 55-day SMA at $1.2303 when it tried to recover.
The breached July-to-November downtrend line, now a support line, at $1.2136 may offer support ahead of the key $1.207 to $1.2038 support zone made up of the October lows.
For a bullish reversal to become possible, a rise and daily chart close above Thursday’s high at $1.2308 would need to be seen, above which lies the mid-October peak at $1.2337.
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