fbpx

EURUSD & GBPUSD downside correction risks resume

4 hour gbpusd chart

  • In our last report here on EURUSD and GBPUSD we highlighted that he early February “risk off” scenario and flight to quality rally in the US Dollar against most currencies appeared to be ending.
  • BUT, recent US Dollar gains driven by a perception of a more hawkish Fed, increasing inflation pressures and a higher yield environment point to further USD strength against the major currencies into March (excluding the Yen).
  • This positive US$ tone has seen the EURUSD downside correction resume for a more negative tone in late February, with growing risks to neutralise the intermediate-term bull trend (below 1.2204) and even to shift bearish (through 1.2159).
  • For GBPUSD, a similar rebound failure and negative tone sees risks lower into late February and into March (with the key downside support level at1.3763). 

EURUSD

Downside risks

A sideways consolidation Friday after an erratic Thursday but the push lower has reinforced the prior break below our notable 1.2275 spike low and despite rebounding from the trend line from late 2017, whilst below resistance at 1.2352/60 we see risks lower Monday.

The latter  2017 push through 1.1961 saw an intermediate-term bullish shift. BUT risk is growing for shift back to an intermediate-term neutral tone through 1.2204 and maybe even to bearish below 1.2159.

For Today:

  • We see a downside bias for 1.2257; break here aims for 1.2233, maybe key 1.2204.
  • But above 1.2331 opens risk up to 1.2352/60, which we would look to try to cap. Above sees risk towards 1.2345

Intermediate-term Outlook – Upside Risks:

  • Whilst above 1.2204, we see a positive tone with the bullish threat up to 1.2600/02, maybe towards 1.3000.

What Changes This? Below 1.2159 signals a neutral tone, quickly shifting negative below 1.2159.

Resistance and Support:

1.2331 1.2352/60** 1.2435* 1.2484 1.2539**
1.2257** 1.2233** 1.2204*** 1.2194 1.2159***

4 Hour Chart

4 hour eurusd chart

GBPUSD

Still a negative tone

A modest rebound effort Friday, but whilst contained below 1.4031 we see still see negative pressures from the mid-February setback from just below our 1.4151 resistance level (from 1.4145), to keep risks lower Monday.

The prior break above 1.3549 shifted the intermediate-term outlook from neutral to bullish.

For Today:

  • We see a downside bias for 1.3904; break here aims for 1.3855/48, maybe towards 1.2799/95 which we would look to try to hold.
  • But above 1.4031 targets 1.4073 and maybe opens risk up to 1.4145/51.

Intermediate-term Outlook – Upside Risks:

  • We see a positive tone with the bullish threat back up to target 1.4465 and 1.4600.

What Changes This? Below 1.3763 signals a neutral tone, only shifting negative below 1.3456.

Resistance and Support:

1.4006 1.4031** 1.4073* 1.4145/51** 1.4228
1.3904 1.3855/48* 1.3799/95** 1.3763* 1.3740/30***

4 Hour Chart

4 hour gbpusd chart

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.


Popular Brokers