Original article by Christopher Lewis, via FX Empire: “EUR/USD, GBP/USD, EUR/GBP – US Dollar Continues to Fight”
The US Dollar continues to display strength across key currency pairs, including EUR/USD, GBP/USD, and EUR/GBP, as traders adapt to shifting market sentiments and global macroeconomic dynamics. The greenback’s performance remains a central focus among forex traders, amid concerns about central bank policies, economic data releases, and broader risk sentiment.
This article provides an in-depth analysis of the EUR/USD, GBP/USD, and EUR/GBP currency pairs, exploring near-term technical outlooks, key support and resistance levels, and potential market catalysts moving forward.
EUR/USD: Greenback Shows Resilience
The EUR/USD pair is currently under pressure, reflecting continued investor preference for the US Dollar. The ongoing divergence in economic data and monetary policy outlooks between the United States and the Eurozone continues to weigh heavily on the Euro.
Key Technical Aspects:
– The EUR/USD pair has experienced a gradual drift lower, indicating a bearish sentiment in the short term.
– Resistance is evident near the 1.09 level, which has served as a significant ceiling in past sessions. A move above this price could signal increased bullish momentum, though such a breakout faces heavy selling pressure.
– At the same time, buyers appear near the 1.07 level. This marks a potential support zone, offering a cushion for the pair as traders consider this level to enter long positions or book profits from shorts.
Fundamental Drivers:
– The US economy continues to show greater resilience compared to the Eurozone, underpinned by solid employment data and relatively stronger GDP growth.
– The European Central Bank (ECB) maintains a dovish tone, with lingering concerns over low inflation and slow economic recovery across the bloc.
– The Federal Reserve, while signaling cautious optimism, retains a more hawkish stance compared to the ECB, particularly due to robust labor market data and sticky inflation components.
Market Outlook:
– Traders are cautious about aggressively selling the US Dollar given the prevailing uncertainty around inflation and interest rates.
– Unless the Eurozone produces unexpectedly strong economic data or the ECB signals a monetary shift, the Euro is likely to remain under pressure against the USD.
– A break below the 1.07 level could open the door to further declines towards 1.06, while a sustained move above 1.09 might signal an attempt to retest 1.10.
GBP/USD: British Pound Faces Headwinds
Similar to the Euro, the British Pound has faced downward pressure against the greenback. The GBP/USD pair reflects challenges within the UK economy as well as global risk sentiment favoring the US Dollar.
Key Technical Analysis:
– The GBP/USD pair has been notably choppy but maintains an overall bearish inclination in the short term.
– Resistance is forming near the 1.27 handle, which coincides with recent swing highs. This level acts as a potential ceiling where sellers could re-enter to drive the pair lower.
– There is minor support near the 1.25 level. A break below this could see the pair approach the 1.24 area, with further downside potential if bearish momentum persists.
Macroeconomic Influences:
– Growth expectations in the UK remain subdued, with the Bank of England (BoE) maintaining a cautious approach to monetary policy.
– Inflation in the UK has moderated, reducing pressure on the BoE to aggressively raise rates.
– Political instability and concerns over the broader European economic landscape also put pressure on the Pound.
Market Sentiment:
– Traders remain hesitant to buy the Pound given the economic uncertainty within the UK and the broader global environment.
– A bullish case would require a sustained move above the 1.27 level, supported by strong UK data or a dovish shift in US monetary policy.
– On the contrary, should the Dollar pick up renewed strength, the Pound could be vulnerable to deeper declines.
EUR/GBP: Rangebound with Subtle Direction
Read more on EUR/USD trading.