**EUR/USD, GBP/USD, and EUR/GBP Forecast: US Dollar Fighting Back on Tuesday**
By Christopher Lewis | FX Empire
The US dollar reasserted itself during Tuesday’s trading session, sparking notable moves across major currency pairs such as EUR/USD, GBP/USD, and EUR/GBP. As investors navigated a data-rich environment and continued to price in evolving monetary policy expectations, the greenback showed renewed vigor. Here, we explore the technical outlook for these three pairs and discuss the factors motivating the latest moves.
## EUR/USD: Bearish Momentum Returns
The EUR/USD pair experienced downward pressure on Tuesday, extending its recent pullback as the dollar gained across the board. Following an earlier attempt to challenge higher resistance, euro bulls lost momentum amid a combination of hawkish commentary from US Federal Reserve officials and soft economic data from the euro area.
### Key Technical Observations
– **Major Resistance at 1.0900**
The EUR/USD tested the psychological 1.0900 zone, a longstanding resistance level that has capped major rallies since April. Sellers were quick to emerge near this threshold.
– **Support at 1.0850 and 1.0800**
After failing to break higher, the pair retreated towards the 1.0850 level, with a further drop targeting the daily support near 1.0800.
– **Daily Moving Averages**
The 50-day and 200-day simple moving averages continue to serve as dynamic support and resistance, with the price drifting below the 50-day SMA, hinting at a reversal of the recent bullish trend.
– **Bearish RSI Divergence**
The Relative Strength Index (RSI) on the daily chart flashed bearish divergence, strengthening the case for a corrective move lower.
### Fundamental Backdrop
– **US Dollar Strength**
The US currency’s improvement was largely fueled by continued resilience in US economic data, which has poured cold water on the notion of imminent rate cuts by the Fed. Instead, policymakers have stressed the need for patience, reinforcing the dollar’s appeal.
– **Slowing Euro Area Growth**
Conversely, euro area data releases point to a slowdown in economic momentum, reducing expectations for European Central Bank tightening and weighing on the euro.
– **Risk Appetite**
A tempering of risk appetite also contributed, with investors seeking the dollar’s relative safety amid heightened geopolitical and economic uncertainty.
### Near-Term Strategy
Given the renewed dollar strength and negative technical signals, traders should closely monitor 1.0850 and 1.0800 as immediate support zones. Breaking 1.0800 could open the door for a move towards 1.0750 and potentially 1.0700. On the upside, only a decisive daily close above 1.0900 would negate the bearish outlook and suggest a bullish resumption.
## GBP/USD: Sterling Reverses as Dollar Rebounds
The British pound started the week with optimism, supported by robust employment data and hopes for sustained growth. However, Tuesday’s session saw a swift shift in sentiment as the US dollar’s strength returned to the fore. The GBP/USD pair lost ground after failing to establish firm footing above 1.2800.
### Important Technical Levels
– **Resistance at 1.2800**
Repeated attempts to move above 1.2800 were met with stiff resistance. Sellers have consistently defended this level.
– **Key Support at 1.2700 and 1.2650**
The retracement brought the pair back towards the critical 1.2700 level. If this gives way, the next focus would be on 1.2650 and the 200-day simple moving average.
– **Short-term Momentum**
The MACD and RSI indicators on the daily chart have just begun rolling over from overbought territory, hinting at a potential correction.
### Macro Fundamentals
– **UK
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