EUR/USD and EUR/GBP/USD appreciate while GBP/USD range trades
Outlook on EUR/USD, EUR/GBP and GBP/USD ahead of this week’s Fed, ECB and BoE rate decisions.
EUR/USD recovers from last week’s low
EUR/USD is seen bouncing off Friday’s low at $1.0838 ahead of this week’s plethora of central bank meetings by the likes of the US Federal Reserve (Fed) which is expected to hike its rates by 25-basis points, the European Central Bank (ECB) and the Bank of England (BoE) which are likely to raise their rates by 50-basis points (bps) respectively.
The currency pair thus remains on track to reach the late April 2022 high and the 50% retracement of the 2021 to 2022 descent at $1.0936 to $1.094 while it stays above Friday’s $1.0838 low on a daily chart closing basis. A drop through $1.0838 would engage the mid-January $1.0766 low. While above it, and the mid- to late-December highs at $1.0736 to $1.0715, the medium-term uptrends remain intact. Above $1.094 lies the psychological $1.10 mark. Further support can be found around $1.0663 to $1.0658, the 16 to 28 December highs.
EUR/GBP bounces off December-to-January uptrend line
EUR/GBP revisited but then bounced off its December-to-January uptrend line at £0.8763 while awaiting Thursday’s ECB and BoE rate decisions, with both central banks expected to hike rates by 50 bps.
While £0.8763 underpins, the £0.8828 November peak as well as the £0.8834 - 22 December high - will be back in play, above which sits more significant resistance which can be spotted between the December and current January highs at £0.8877 to £0.8897. Only a slip through £0.8763 would engage the 55-day simple moving average (SMA) at £0.8735 and current January low at £0.8722. If slipped through, the 23 November high and 19 December low at £0.8701 to £0.8691 could once again be reached. Further down sits the 28 November high at £0.8676.
GBP/USD continues to range trade below its $1.2446 December high
GBP/USD’s September advance from its $1.0350 all-time low struggled to overcome its December high at $1.2446 early last week and has been trading in a sideways trading range below this high ever since while awaiting Thursday’s UK central bank decision.
This is not to say that the cross might not eventually rise to above its December and January highs at $1.2446 to $1.2448, provided that the 24 January low at $1.2263 doesn’t give way.mWere this to happen, the 9 January high at $1.221 may be reached. A rise and daily chart close above last week’s $1.2448 high would engage the minor psychological $1.2500 mark, above which the 7 June 2022 high can be found at $1.2599.
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.
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