- The US Dollar has shifted to a more bullish tone, strengthening against most major currencies in the second half of April, a reaction to increasing inflationary pressure concerns, the perception of a possibly more hawkish FOMC and higher US Treasury yields.
- EURUSD was in an intermediate-term range (1.2539 to 1.2153), but the US Dollar rally as highlighted above alongside the plunge lower after the ECB Meeting on Thursday 26th April, saw a break below 1.2153 for a shift to an intermediate-term bear trend.
- GBPUSD has suffered both from the aforementioned strengthen US Dollar, but also from fading chances of a Bank of England rate hike in May, setting GBUSD to a neutral intermediate-term theme (from bullish), with risks skewed for a bearish intermediate-term trend shift below 1.3710.
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EURUSD Downside risks after intermediate-term bear shift
A prod still lower Friday as expected through 1.2093; and to probe 1.2059, reinforcing the ECB Thursday surrender of key 1.2153, to keep risks lower for Monday.
The latter April plunge through 1.2153 set an intermediate-term bear trend.
- We see a downside bias for 1.2053; break here aims for 1.2026, 1.2001/00 and maybe even towards 1.1935.
- But above 1.2155 opens risk up to 1.2210, maybe 1.2245.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.2000.
- Lower targets would be 1.1914, 1.1716 and 1.1553.
- What Changes This? Above 1.2414 shifts the outlook back to neutral; above 1.2539 is needed for a bull theme.
Resistance and Support:
4 Hour EURUSD Chart
GBPUSD Bearish threat intensifying
A plunge lower Friday through various supports from early March (1.3894 through 1.3754) to reinforce Thursday’s rebound failure from just above our 1.3997 resistance (from 1.3998) sustaining bear pressures from the plunge through key 1.3964, keeping risks lower Monday.
The April surrender of 1.3964 and the up trend line from late 2017 neutralised the intermediate-term bull trend for an intermediate-term range theme (1.3710 to 1.4377), BUT with strong risks for a bearish shift below 1.3710.
- We see a downside bias for 1.3746; break here aims for key 1.3710, then maybe for 1.3683, 1.3664 and even 1.3610.
- But above 1.3808 aims at 1.3894 and maybe opens risk up to 1.3921.
Intermediate-term Range Breakout Parameters: Range seen as 1.3710 to 1.4377.
- Upside Risks: Above 1.4377sets a bull trend to aim for 1.5006.
- Downside Risks: Below 1.3710 sees a bear trend to target 1.3456, 1.3302/00 and 1.3038.
Resistance and Support:
4 Hour GBPUSD Chart