US Dollar weakness since the mid-March FOMC Meeting has allowed for both EURUSD and GBPUSD spot FX rates to push notably higher and threaten a more bullish tone. Despite setbacks late last week (which will likely see some downside risk early this week), the threat for these currency rate is for higher price action into late March and early April, potentially for more bullish statements. See historical forex analyses.
For EURUSD, a more bullish tone has been hinted at by the indication of a multi-month Inverse Head and Shoulders pattern. A push above 1.0829 would signal an intermediate-term bullish switch.
GBPUSD, however, is not in as bullish a position and again the risk is for a minor setback to start this week. However, the risk is growing for a more bullish shift, but this is only signalled above 1.2775.
An erratic tone again Friday and despite still holding above modest support at 1.0752 plus the strong rally Tuesday above the neckline of a multi-month Inverse Head and Shoulders pattern, we see risks lower Monday whilst capped below 1.0825/29.
However, bigger picture threat remains to neutralise the intermediate-term bearish theme above 1.0829, potentially shifting bullish through 1.0874.
- We see a downside bias for 1.0752; break here aims for the 1.0717/03 area.
- But above 1.0825/29 opens risk up to 1.0874.
Short/ Intermediate-term Outlook – Downside Risks:
- Whilst just holding below 1.0829, we see a negative tone with the bearish threat to 1.0339 and parity (1.0000).
What Changes This? Above 1.0829 signals a neutral tone, only shifting positive above 1.0874.
Daily EURUSD Chart
A notable setback Friday after a strong theme most of last week (up through resistance at 1.2500/06) and since the FOMC Meeting in mid-March, shifting immediate risk lower for Monday.
However, risk is growing for a bullish shift in the intermediate-term outlook, but only signalled above 1.2775.
- We see a downside bias for 1.2460; break here aims for 1.2439, maybe down towards 1.2384.
- But above 1.2550 opens risk up to 1.2570/82 resistance peaks, maybe up towards 1.2634.
Short/ Intermediate-term Range Parameters: We see the range defined by 1.1982 and 1.2775.
Range Breakout Challenge
- Upside: Above 1.2775 aims higher for 1.3000, 1.3121 and 1.3455/3534 area.
- Downside: Below 1.1982 sees risk lower for 1.1943, 1.1880 and 1.1500.
4 Hour GBPUSD Chart