EUR/USD, EUR/GBP GBP/USD slip on Euro weakness and US Dollar strength
EUR/USD and EUR/GBP continue to drop amid a depreciating Euro with GBP/USD being under the cosh as well as the US Dollar continues its strong appreciation.
EUR/USD slips towards the $1.0806 March low
EUR/USD is seen sliding for its fifth consecutive day and is fast approaching the $1.0806 early March low as the US Dollar continues to appreciate ahead of this evening’s Federal Open Market Committee (FOMC) minutes.
Given the strength of the current decline, which has come after a corrective wave to the upside during much of March, it is likely that the $1.0806 low will soon be fallen through with the February 2020 low at $1.0778 representing the next downside target. Further down lies the $1.0727 April 2020 low.
The late March low at $1.0945 and breached one-month downtrend line at $1.1008 should now act as resistance, if revisited at all. Major resistance remains to be seen between the January low and March high at $1.1122 to $1.1185. While the cross stays below this area, the long-term downtrend remains valid.
EUR/GBP’s swift decline is heading towards a support zone
EUR/GBP’s bearish reversal from its £0.8512 late March high has taken it through the one-month support line at £0.8373 towards the £0.8305 to £0.8286 support area on the back of a weaker Euro as German factory orders decline by 2.2% month-on-month (MoM), much worse than the expected 0.2% drop.
It is the first fall in four months as supply constraints, soaring energy prices and uncertainty linked to Russia's invasion of Ukraine negatively impact foreign demand. The £0.8305 to £0.8286 support zone contains several daily lows made in January, February and on the 23 March and as such is expected to withstand the first test.
Minor resistance above the breached one-month support line at £0.8373 can be spotted between the 16 and 25 February highs at £0.8402 to £0.8408.
GBP/USD continues its descent towards the March low at $1.3001
GBP/USD earlier today flirted with the late March low at $1.3051 as the US dollar continues to appreciate amid investors betting on the Federal Reserve (Fed) raising rates by 225 basis points (bp) by year end.
A fall through $1.3051 would engage the March trough at $1.3001, below which there is no support to speak of until the $128.55 to $1.2813 June 2020 high and November 2020 low.
Immediate downside pressure should be maintained while the cross remains below the two-month downtrend line at $1.3149 and, more importantly, the 30 March and 5 April highs at $1.3167 to $1.3182.
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