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US Dollar Strengthens Versus GBP & EUR; More to Come

Technical Analysis

The US$ continues to pose gains into May against both the GB Pound and the Euro and is threatening to shift the intermediate term outlook versus these currencies to more positive for the US currency.

Although both Cable (GBPUSD) and EURUSD retain intermediate-term bullish outlooks, the risk into the second half of May is for a shift back to more neutral range environments as the USD strengths. In fact, the threat is for more bearish shifts for GBPUSD and EURUSD.

GBPUSD

A break lower on Friday down through support at 1.4370, again after a stall last week ahead of 1.4544 and 1.4572/75 resistances from early May, to again leave a bear bias for Monday.

Moreover, growing risk into this week is for a shift back to a broader, neutral range theme with a break below 1.4297.

For Monday:

  • We see a downside bias for 1.4339; break here aims for 1.4297/83, maybe 1.4205/00.
  • But above 1.4425/30 opens risk up to 1.4531/44, maybe 1.4572/75.

Short/ Intermediate-term Outlook – Upside Risks:

  • We see a positive tone with the bullish threat to 1.4816.
  • Above here targets 1.4945, 1.5000 and 1.5240.

What Changes This? Below 1.4297 signals a neutral tone, only shifting negative below 1.4089.

Daily GBPUSD Chart

GBPUSD

EURUSD

A break lower Friday to take out supports at 1.1357, 1.1346 and 1.1294 and reinforce the Thursday stall back from ahead of 1.1481 spike high (from 1.1447) to keep the bias lower into Monday.

The growing threat into this week is now for a push below 1.1213, which would see an intermediate service shift from bullish to a neutral tone; only through 1.1142 to support sees a bearish switch.

For Monday:

  • We see a downside bias for 1.1266 and key 1.1213; break here aims for critical 1.1142.
  • But above 1.1355/60 opens risk up to 1.1415, maybe 1.1447.

Short/ Intermediate-term Outlook – Upside Risks: A strong rally through the 10/03 ECB Meeting through 1.1157 shifted the intermediate term outlook to bullish.

  • Whilst above 1.1213 we see a positive tone with the bullish threat to 1.1714.
  • Above here targets 1.1871 and 1.2000.

What Changes This? Below 1.1213 signals a neutral tone, only shifting negative below 1.1142.

Daily EURUSD Chart

EURUSD

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