EUR/USD and EUR/GBP neutral ahead of FOMC but GBP/USD forms a bullish reversal pattern
GBP/USD forms a bullish hammer reversal pattern on the daily candlestick chart, while the euro struggles against both the dollar and the pound.
EUR/USD still flirts with the channel support line ahead of the FOMC statement
Yesterday EUR/USD briefly slid through the two-month channel support line at $1.1294, to a new January low at $1.1263, before trading back around the channel line ahead of today’s Federal Open Market Committee (FOMC) meeting. A drop through yesterday’s low at $1.1263 would lead to the mid-December low at $1.1222 as well as the November trough at $1.1186 being eyed.
So far, the downtrend from mid-January continues to cap the cross. While EUR/USD remains below the last reaction high at $1.1369, the 20 January high, the bears stay in control. Above it, more significant resistance can be made out between the late-November and December highs at $1.1383 to $1.1387.
EUR/GBP gives back most of this week’s gains
Even though EUR/GBP technically formed a bottom by rising above the November low and last week’s high at £0.8379 to £0.8381, yesterday’s slip may trigger further short-term weakness which is likely to peter out above the current January low at £0.8305, however. This low was made right within major support at £0.8313 to £0.8277, consisting of the December 2016, April 2017, December 2019 and February 2020 lows.
While EUR/GBP stays above the 24 January low at £0.8351, the bulls should retain the upper hand. A drop below this level may lead to the early-January low at £0.8335 being back in the picture, though. Together with the 11 January trough at £0.8324, this level is expected to withstand any downside pressure before renewed upside momentum is likely to enter the fray. Good resistance can now be found between early January and this week’s highs at £0.8419 to £0.8423.
GBP/USD formed a hammer on the daily candlestick chart
GBP/USD's descent since its $1.3749 mid-January peak has practically taken it back to its early January low at $1.3431 by dropping to yesterday’s low at $1.3436 before forming a bullish Hammer on the daily candlestick chart. This may well denote the end of the last couple of weeks’ countertrend correction.
While $1.3431 underpins, a rise back towards the 200-day simple moving average (SMA) at $1.3661 is to ensue, confirmation of which would be an advance above the 24 January high at $1.3565. Currently, unexpected failure at $1.3431 could lead to a drop to the 61.80% Fibonacci retracement and mid-December high at $1.3387 to $1.3374 to ensue, however.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
