EUR/USD and GBP/USD recover further from multi-decade lows, while EUR/GBP falters
EUR/USD and GBP/USD try to regain some of their recent losses, while EUR/GBP loses upside momentum.
EUR/USD probes resistance post 75-basis point ECB rate hike
EUR/USD shot up to its $1.0079 to $1.0097 late July low and late August highs following the European Central Banks (ECB) unprecedented 75-basis point (bp) rate hike on Thursday, following its 50-bp raise in July.
With the main refinancing rate now at 1.25% and policymakers indicating that several more rate hikes are planned for the months ahead, the Euro looks short-term bid, despite it currently being capped by the $1.0079 to $1.0097 resistance area. If overcome, the 55-day simple moving average (SMA) and 17 August high at $1.0155 to $1.0203 would represent the next upside target zone.
Minor support comes in around parity, a psychological level market participants focus on.
EUR/GBP retests June peak after ECB rate hike
EUR/GBP rallied close to its June peak at £0.8721 following the ECB’s 75-bp rate hike in September with the main refinancing rate now standing at 1.25%, the marginal lending facility at 1.5% and the deposit facility at 0.75%.
Short term, the June high is expected to cap with the July and early September highs around £0.8677 expected to be revisited. While Thursday’s intraday low at £0.8655 underpins, however, an immediate upside bias should be maintained. A rise and daily chart close above the June peak at £0.8721 would mean a significant break out of a key resistance zone and would open the way for the £0.8797 early February 2021 high to be reached.
Were a reversal to the downside to take shape, though, and Thursday’s low at £0.8655 to give way, another interim top would likely be formed with the current September low at £0.8567 being back in the firing line. The fact that negative divergence can be spotted on the daily relative strength index (RSI) points to the toppish scenario being the more likely one.
GBP/USD recovers from its 37-year low
GBP/USD recovers from this week’s $1.1406 low, a level last traded in 1985, as market participants wonder how the new UK prime minister Liz Truss will finance her proposed energy price cap and other economic policies which will greatly add to the UK’s debt burden.
After initial falls close to the $1.14 mark the cross managed to break out of its August-to-September downtrend channel and revisit its $1.1609 Tuesday high which represents minor resistance. If overcome on a daily chart closing basis, a minor bullish trend reversal will take shape with the July and 23 August lows at $1.1718 to $1.1761 being targeted.
Slips should find support on Friday around the $1.15 mark which acted as support in early September.
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