**EUR/USD, GBP/USD, and EUR/GBP Forecast: US Dollar Continues to Show Strength**
*Based on the analysis by Christopher Lewis, as published on FX Empire (https://www.fxempire.com/forecasts/article/eur-usd-gbp-usd-and-eur-gbp-forecast-us-dollar-continues-to-show-strength-1559187)*
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**Overview**
The foreign exchange market has been characterized by notable volatility in recent sessions as the US dollar asserts its dominance against key counterparts such as the euro and British pound. The backdrop of strong US economic indicators, diverging monetary policy expectations between the Federal Reserve and other major central banks, and shifting global risk sentiment continues to play a significant role in dictating the trajectory of the EUR/USD, GBP/USD, and EUR/GBP pairs.
In this detailed analysis, we break down recent price action, technical observations, and potential strategic considerations for each of these currency pairs, drawing on the expert assessment provided by Christopher Lewis for FX Empire.
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## EUR/USD Analysis
The euro has found itself under considerable pressure as the US dollar capitalizes on its haven status and persistent outperformance of the US economy relative to that of the Eurozone.
### Key Drivers:
– **Interest Rate Divergence**: The European Central Bank (ECB) is signaling dovish intent, while the Federal Reserve maintains a data-driven, hawkish-hold posture, reinforcing dollar strength.
– **Geopolitical Tensions**: Uncertainty in Eastern Europe and the Middle East contributes to a flight to safety, favoring the US dollar.
– **Macro Data Disparity**: US economic data remains robust, with the labor market and consumer sentiment highlighting resilience. In contrast, the Eurozone contends with lackluster growth and lagging inflation, further undermining the euro.
### Technical Perspective:
Christopher Lewis underlines that the EUR/USD pair is decisively on the defensive. Recent sessions have seen clear breaches of significant support levels, with the following technical takeaways:
– **Current Trend**: Strongly bearish, with lower highs and lower lows persisting on both the daily and weekly charts.
– **Support/Resistance**:
– Immediate support sits around the 1.0620 level, followed by the psychologically important 1.0500 region.
– Resistance appears at 1.0700, then again at 1.0800, levels that formerly offered support but are now likely to cap any rallies.
– **Momentum Indicators**: Relative Strength Index (RSI) readings show the pair is approaching oversold territory, but not to the point that an imminent reversal is implied.
### Potential Scenarios:
– **If bullish catalysts (i.e., surprisingly robust Eurozone data or dovish hints from the Fed) emerge**, EUR/USD could stage a technical bounce toward 1.0700 or 1.0800.
– **However, so long as current macro forces persist**, rallies should be viewed as selling opportunities. The path of least resistance remains downward, with a possible retest of 1.0500 in the near-term.
### Strategic Considerations:
– **Traders may prefer to look for short positions on rallies**, employing tight risk management and targeting the next immediate support levels.
– **Long positions** should be approached with caution unless there is clear evidence of bearish exhaustion or a policy shift from the Fed.
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## GBP/USD Analysis
Sterling is similarly confronted by the brunt of US dollar strength, with added headwinds from domestic economic challenges and an increasingly cautious Bank of England (BoE).
### Key Drivers:
– **Bank of England Stance**: The BoE has adopted a more dovish tone as UK inflation eases and recession risks linger, undercutting the pound’s attractiveness.
– **US Exceptionalism**: As in the EUR/USD narrative, US economic resilience and higher relative yields act as a magnet for investment flows into the dollar.
– **Risk
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