EUR/USD and GBP/USD benefit from weaker US dollar but EUR/GBP struggles
Outlook on EUR/USD, EUR/GBP and GBP/USD ahead of Thursday’s Jackson Hole symposium.
EUR/USD tires to regain some of its recent losses
EUR/USD’s decline from its $1.1275 July peak has taken it to last week’s low at $1.0862 before the cross recovered as U.S. 10-year yields rallied to levels last seen in November 2007.
The downtrend channel resistance line and 55-day simple moving average (SMA) at $1.0964 are now in focus, as is the minor psychological $1.10 region around which EUR/USD oscillated for much of August.
Slips should find support around Friday’s high at $1.0894. The $1.0862 to $1.0834 July and current August lows make up solid support with the 200-day SMA at $1.0799.
EUR/GBP remains above support
Following last week’s sell-off, EUR/GBP continues to stabilize above its £0.8522 to £0.8504 June and July lows, as UK public sector borrowing in July was the 5th highest on record. Excluding banks it came in at £4.3 billion in July, up from £0.9 billion a year ago but below market expectations of £5.0 billion.
Below last week’s low at £0.8524 lies the £0.8522 to £0.8504 support area.
Monday’s high at £0.8563 needs to be bettered for a rise back towards the 55-day SMA at £0.8583 to ensue.
GBP/USD gains further ground
On Tuesday morning GBP/USD managed to heave itself above its 55-day SMA at $1.2773 for the first time in nearly two weeks with the 10 August peak at $1.2819 representing its next upside target as the U.S. dollar retracts ahead of Thursday’s Jackson Hole symposium.
Only a rise and daily chart close above the 10 August high at $1.2819 could technically indicate that a bullish reversal is being formed.
While Friday’s low at $1.2690 underpins, the odds favour further upside. Good support sits between the early-and mid-August lows at $1.2621 to $1.2617.
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