Adapted from the original article by ActionForex.com
Technical Outlook: EUR/USD, GBP/USD, USD/CHF, USD/JPY (Originally published by ActionForex.com)
The forex market continues to show dynamic movements as global economic indicators, geopolitical tensions, and central bank policies shape currency performance. This technical analysis explores the short to medium-term trajectory for four major currency pairs: EUR/USD, GBP/USD, USD/CHF, and USD/JPY. Traders closely monitor technical levels for key breakout or reversal signals, and this update from ActionForex provides a valuable roadmap.
EUR/USD Outlook
The EUR/USD pair traded within a relatively tight range as it encounters critical support and resistance levels. The pair’s direction remains influenced by diverging monetary policy stances between the European Central Bank (ECB) and the US Federal Reserve.
Key Observations:
– EUR/USD is under mild bearish pressure after failing to break above 1.2175, a recent peak.
– The pair has since retreated toward a near-term support level around 1.2050.
– Momentum indicators such as RSI and MACD show slight bearish divergence, reflecting waning buying strength.
– The 55-day Exponential Moving Average (EMA), now hovering near 1.2040, provides initial support.
– A clear break below 1.2040 would increase downside momentum, targeting the psychological level at 1.2000. A further drop could see EUR/USD testing 1.1950 and even 1.1800 if bearish conditions persist.
– On the upside, resistance is reinforced at 1.2175. A successful breach of this level would signal renewed bullish interest, potentially leading the pair toward the 1.2240 region.
Market Drivers:
– ECB’s cautious stance on tightening monetary policy contrasts with the Fed’s relatively more hawkish tone.
– US Treasury yields remain firm, offering support to the dollar.
– European data, especially inflation figures and PMI readings, will be key short-term influencers.
Technical Strategy:
– Bearish traders may consider short positions below 1.2040 with targets near 1.1950.
– Bullish opportunities emerge only if 1.2175 is breached with conviction.
GBP/USD Outlook
The British pound has shown relative resilience against the US dollar but faces stiff resistance near recent highs. Market participants are balancing optimism over the UK’s economic recovery with concerns about inflationary pressure and central bank actions.
Key Observations:
– GBP/USD remains in consolidation below the 1.4000 barrier.
– The pair has held strong around support levels near 1.3800, indicating a bullish undercurrent.
– Short-term moving averages, particularly the 20-day and 55-day EMAs, show a flattening trend, suggesting a neutral to slightly bullish bias.
– Momentum indicators remain supportive, but not aggressively so.
Support and Resistance Levels:
– Immediate resistance is seen at 1.3975-1.4000; a break above this range could fuel a rally toward 1.4100.
– On the downside, 1.3800 is pivotal support. A breakdown below could open further losses toward 1.3670 and eventually 1.3540.
Fundamental Influences:
– UK economic reopening after COVID-19 lockdowns has spurred growth optimism.
– BoE has hinted at eventual tightening, but data dependency remains high.
– Watch for employment and inflation data, as these will likely shape the BoE’s next move.
Technical Strategy:
– Buyers may enter on dips around 1.3800 with stops below 1.3750, targeting 1.4000.
– Bears could wait for a breakdown below 1.3800 to test 1.3670.
USD/CHF Outlook
The Swiss franc continues to show limited volatility, with USD/CHF trading narrowly amid broader dollar strength and risk sentiment. The pair is attempting to build a base, but upward momentum is tentative.
Key Observations:
Explore this further here: USD/JPY trading.