- In our 21st January report on EURUSD and GBPUSD we highlighted EURUSD positivity in a broader range and the bull theme for GBPUSD.
- The primary development in the Forex space in February has been the emergence of a stronger US Dollar, driven by global growth and slowdown concerns, with the US currency seen as a safe haven and with a still robust economy.
- This US$ strengthens has allowed for subsequent losses for the EURUSD currency pair, which now sees downside threats within the broader, intermediate-term range we see as 1.1268/62 to 1.1570, with the near-term risk to the lower support area.
- For Cable, the GBPUSD FX rate, a more negative consolidation theme has surfaced in February driven by both a firmer US Dollar and renewed concerns regarding potential for a No Deal Brexit.
- With notable GBPUSD support levels and factors surrendered, the immediate risk is for the intermediate-term bull trend to be tested.
EURUSD Risks shift lower
A probe lower again Friday to reinforce the grind lower as seen through early February, reinforcing the breakdown through the 1.1404/1389 support area, to keep the bias lower for Monday.
The latter January prod below the 1.1308 level confirmed an intermediate-term range theme, seen as 1.1268/62 to 1.1570.
- We see a downside bias for 1.1317; break here aims for 1.1288, maybe the key 1268/62 area.
- But above 1.1402 aims for 1.1434 and opens risk up to 1.1488.
Intermediate-term Range Breakout Parameters: Range seen as 1.1268/62 to 1.1570.
- Upside Risks: Above 1.1570 sets a bull trend to aim for 1.1621, 1.1815 and 1.2000.
- Downside Risks: Below 1.1268/62 sees a bear trend to target 1.1119, 1.1000 and 108.39.
Resistance and Support:
4 Hour EURUSD Chart
GBPUSD Still a downside threat to key 1.2831/29 support
A low-level consolidation Friday after Thursday’s very erratic activity to probe below 1.2854 support and stay capped during the rebound by 1.2996 resistance, sustaining negative forces from the earlier February plunge through the 2019 up trend line, to keep risks lower into Monday.
The mid-January push up through 1.2928 set an intermediate-term bullish outlook, BUT risk is now for a switch back an intermediate-term neutral theme below key 1.2831/29.
- We see a downside bias through 1.2901/00; break here aims for 1.2853 and maybe even the key 1.2831/29.
- But above 1.2996 opens risk up to 1.3052.
Intermediate-term Outlook – Upside Risks: We see an upside risk for 1.3175.
- Higher targets would be 1.3299 and 1.3473.
- What Changes This? Below 2831/29 shifts the outlook back to neutral; through 1.2668 is needed for a bear theme.
Resistance and Support:
4 Hour GBPUSD Chart