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EUR/USD and GBP/USD under pressure while EUR/GBP consolidates

EUR/USD and GBP/USD ease off preceding FOMC while EUR/GBP pauses near resistance.

​EUR/USD slips back towards channel support line ahead of FOMC

EUR/USD is revisiting its two-month channel support line at $1.1307 which held last week, but this week may well give way ahead of key policy decisions from the US Federal Reserve (Fed) on Wednesday.

A fall through the channel support line at $1.1307 would push the late December and early January lows at $1.1274 to $1.1272 to the fore. Further down lie the mid-December low at $1.1222 as well as the November trough at $1.1186, both of which would become downside targets on a slip through the $1.1272 early January low.

Immediate downside pressure will remain in play while the cross stays below the 16 January high at $1.1369 and, more importantly, the late November and December highs at $1.1383 to $1.1387.

EUR/GBP gives back some of last week’s gains

Last week EUR/GBP made a new year-to-date low at £0.8305, right between the £0.8313 to £0.8277 December 2016, April 2017, December 2019 and February 2020 lows, before shooting up on weaker than expected UK retail sales.

While the November low and last week’s high at £0.8379 to £0.8381 aren’t bettered, however, overall downside pressure should retain the upper hand with the December 2019 and February 2020 lows at £0.8282 to £0.8277 representing key long-term support which will probably again hold, if revisited. Only if fallen through, would the April 2016 high at £0.8118 be in focus.

A break above resistance at £0.8381 would lead to the £0.8403 October low being eyed. Further up, this year’s high-to-date can be seen at £0.8419.

GBP/USD slides towards the 38.2% Fibonacci retracement at $1.3526

GBP/USD's descent since its $1.3749 mid-January peak has practically taken it back to the 38.2% Fibonacci retracement of the December-to-January advance at $1.3526, below which the mid-November high at $1.3514 is to offer short-term support.

Slightly further down the 6 January low can be found at $1.349 and this year’s low-to-date at $1.3431.

Only a currently unexpected bullish reversal and rise above the 20 January last reaction high and the 200-day simple moving average (SMA) at $1.3662 to $1.3668 would invalidate the current short-term bearish pressure.

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