- An extended selloff for both EURUSD and GBPUSD into late May has primarily driven by broad European currency weakness in the light of the concerns regarding the Italian political situation.
- This has reinforced the intermediate-term bear trends previously seen from April, with the prior bear trends also a reflection of US$ strength from the move higher in US Treasury yields and perception of a potentially more hawkish FOMC.
- In the very short-term, however, risk is for both EURUSD and GBPUSD to see upside corrections, before the intermediate-term bearish themes resume.
EURUSD Recovery bias
A solid rebound Wednesday through resistances at 1.1566 and 1.1640, for now rejecting negative pressures from this week’s bear extension through multiple supports (1.1605,1.1586 and 1.1553 supports to prod our 1.1510/00 area), shifting the bias higher Thursday.
The latter April plunge through 1.2153 set an intermediate-term bear trend.
- We see an upside bias for 1.1687; break here aims for 1.1750 and 1.1789, maybe for 1.1830.
- But below 1.1629 opens risk down to 1.1593 and 1.1551, maybe for the 1.1509/00 area.
Intermediate-term Outlook – Downside Risks: Whilst below 1.1996 we see a downside risk for 1.1553.
- Lower targets would be 1.1312 and 1.1134.
- What Changes This? Above 1.1996 shifts the outlook back to neutral; above 1.2140 is needed for a bull theme.
Resistance and Support:
4 Hour EURUSD Chart
GBPUSD Downside bias today, but only whilst below 1.3325
A cautious bounce effort on Wednesday still contained below initial resistance at 1.3325, and whilst below here we see immediate bear forces from Tuesday’s selloff to another new bear move low (through 1.3292, 1.3251 and 1.3220 supports), leaving risks lower into Thursday (whilst below 1.3325).
The early May plunge through 1.3710 set an intermediate-term bear trend.
- Whilst below 3325, we see a downside bias for 1.3203 and then 1.3186, maybe towards the 1.3135/31 area.
- But above 1.3325 aims for 1.3378, maybe towards 1.3466.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.3040/27 and 1.3000.
- Lower targets would be 1.2773 and 1.2587.
- What Changes This? Above 1.3618 shifts the intermediate-term outlook from bearish back to neutral, but only to bullish above 1.3998.
Resistance and Support:
4 Hour GBPUSD Chart
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