Both GBP/USD and EUR/USD are making recoveries against the US Dollar in the European session as the greenback as US Dollar weakens. Traders, however, remain cautious amid economic concerns and upcoming events. GBP/USD is approaching 1.2450 while EUR/USD holds steady near 1.0700. Technical indicators point to a bearish bias in the short-term outlook for both pairs, but key support levels and resistance levels could determine their next moves.
EUR/USD Holds Steady as US Dollar weakens Supports, Technicals Signal Bearish Bias
Both currency pairs are influenced by market risk sentiment and technical factors, while upcoming economic data and events, such as the UK PM’s US visit and inflation reports, could also impact their movements. As the US Dollar weakens, traders watch for potential extensions of the recoveries, but caution prevails in the face of economic uncertainties.
EUR/USD is holding steady near 1.0700 during the European session, benefiting from renewed weakness in the US Dollar despite tepid risk sentiment. Mixed German Industrial Production data are capping the upside of the EUR/USD pair. The pair remains below the 20- and 50-period Simple Moving Averages (SMA) on the four-hour chart, while the Relative Strength Index (RSI) indicator is declining toward 40. These technical indicators suggest a bearish bias in the short term, but the upper limit of the descending channel remains intact as support at 1.0670.
If the pair falls below 1.0670 and begins to use it as resistance, it may extend its decline toward 1.0650 (end-point of the latest downtrend), 1.0620 (mid-point of the descending channel), and 1.0600 (psychological level, lower-limit of the descending channel).
Alternatively, if EUR/USD stabilizes above 1.0700 (psychological level, 20-period SMA, 50-period SMA), it could stage a recovery towards 1.0750 (100-period SMA, Fibonacci 23.6% retracement of the latest downtrend). Only with a daily close above 1.0750, the next bullish target would be set at 1.0800 (Fibonacci 38.2% retracement, psychological level).
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GBP/USD Recovers Ground as Dollar Weakens, Cautious Trading Ahead of UK PM’s US Visit
GBP/USD is making a recovery towards 1.2450 as the US Dollar turns bearish in the European session. Traders remain cautious due to British economic concerns and ahead of UK PM Rishi Sunak’s visit to the US. The pair is currently trading near 1.2440, near the Fibonacci 38.2% retracement level of the latest downtrend. If this level holds as support, the next targets could be 1.2480 (200-period SMA, Fibonacci 50% retracement) and 1.2500 (psychological level).
On the downside, initial support is seen at 1.2420 (100-period SMA, 50-period SMA, ascending trend line), followed by 1.2400 (psychological level) and 1.2360 (static level).
The four-hour chart shows a slight rise in the Relative Strength Index (RSI) indicator, indicating a bullish bias in the short-term outlook. GBP/USD has gained bullish momentum in the European morning and is approaching the mid-1.2400s.
The pair faces strong resistance at 1.2440, but a breakthrough could lead to further gains.
GBP/USD briefly dropped below 1.2400 for the third consecutive day but quickly reclaimed that level as the US Dollar struggled to maintain its strength. The recent rebound seems to be driven by technical factors rather than fundamental drivers.
Later in the day, the US Census Bureau will release the Goods Trade Balance data for April, and the Federal Reserve’s Consumer Credit Change data will also be featured. However, these figures are unlikely to significantly influence market positions ahead of next week’s important inflation report and FOMC policy meeting.
Therefore, GBP/USD movements during American trading hours are expected to be influenced by market risk perception and technical developments.
As of now, US stock index futures are trading mostly unchanged following a modest decline in the Asian session. If Wall Street opens positively and gains momentum, GBP/USD could extend its rebound, while the opposite scenario could reverse the gains.
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Conclusion
The recent movements in the EUR/USD and GBP/USD currency pairs highlight the influence of cautious sentiment and the strength of the US Dollar. Traders and investors closely analyze key levels, technical indicators, and economic events to make informed decisions in the forex market. While the US Dollar weakens below 1.0700 and the GBP/USD eased to 1.2400, future movements will depend on factors such as risk sentiment, central bank decisions, and economic data releases. By staying updated and analyzing these factors, traders can navigate the forex market with a more comprehensive understanding of potential trends and opportunities.
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