Overnight retracements for EUR/USD and GBP/USD point to likely breaks in opposing direction, which is reflected in EUR/GBP.

Pound and dollar
Source: Bloomberg

EUR/USD retraces within uptrend

EUR/USD is pulling back this morning, following a clear uptrend in play over the past four trading days. The resistance points of note are at $1.1012 and $1.1060, which remains relatively far away from current price.

Thus further upside is deemed likely for now, with a bullish signal found through a close of a 15 or 30 minute candle above $1.0947.

Ultimately, a bullish reversal is preferred unless we see an hourly close back below $1.0904, which would provide a big question mark over this rally. Support levels of note are found at $1.0883 and $1.0848.

GBP/USD downside likely

The divergence between the euro and sterling looks set to continue, with GBP/USD looking bearish despite a strong rally overnight.

The break through $1.4865 provided a renewed bearish signal, with this current rally likely to merely represent a short-term retracement. As such, a bearish view is held, with support levels of $1.4831, $1.4805 and $1.4635 the next in view.

Conversely, a more bullish view would appear should we see an hourly close back above $1.4908.

EUR/GBP retracement unlikely to last

With both EUR/USD and GBP/USD retracing in the opposite direction, EUR/GBP perfectly encapsulates this relationship to an even greater degree. The retracements are amalgamated into one larger pullback, set within an uptrend.

As such, another move higher seems highly likely, with a bullish reversal expected today. One potential source of such upside could be the £0.7345 support level, yet ultimately we will be watching short-term candle patterns for clues of a bullish reversal.

Thus we hold a bullish for now, with resistance levels of note at £0.7358, £0.7389 and £0.7416.

The bullish view holds unless we see an hourly close below £0.7320, upon which the support levels £0.7303 and £0.7279 come into view.

Warning signs for NZD/USD rally

The Kiwi has been one of the strongest performers in the past week, with NZD/USD rising over 2% since last week’s low of $0.6681.

However, the pair has come into both trendline and horizontal resistance, which threatens to reverse some of these gains. Should we see the pair fail to break and close above $0.6835, then the writing could be on the wall for some form of move lower.

The bearish signal would be an hourly close below $0.6800, to form a short-term double top, with $0.6788, $0.6763 and $0.6681 the next support levels.

Should we see a break through $0.6835, then this would point towards further gains in line with the uptrend in play over the past month.

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