EUR/USD, GBP/USD try to stabilize amid heightened Middle East tensions while EUR/GBP pauses
Outlook on EUR/USD, EUR/GBP and GBP/USD amid the ongoing Israel/Hamas crisis.
EUR/USD tries to hold amid heightened Middle East tensions
Last week’s EUR/USD rejection by the upper July-to-October downtrend channel resistance line at $1.0639 has been followed by a swift sell-off as US consumer price index (CPI) inflation came in slightly higher-than-expected and heightened Middle East tensions led to safe haven flows into the US dollar.
Below Friday’s low at $1.0496 lies the key $1.0484 to $1.0444 support zone, made up of the mid-November high, 7 December and 6 January lows. Provided it holds, the pair may still bottom out from a medium-term perspective.
Minor resistance sits at Friday’s $1.0558 high and further up at the previous Friday’s high at $1.06 and then the late September high at $1.0617. Further resistance sits at the May low and mid-September low as well as this week’s high at $1.0632 to $1.0639. Only a rise and daily chart close above these levels would confirm a bottoming formation.
EUR/GBP recovers from last Friday’s £0.8617 low
EUR/GBP’s descent from its £0.8706 September high has taken it to last week’s £0.8617 low from where the cross is currently recovering ahead of Wednesday’s UK inflation data.
Good support now sits between the late August high, late September low and last week’s low at £0.8631 to £0.861 while minor resistance comes in at last week’s high at £0.8664. Above it sit the late June and mid-August highs at £0.8658 to £0.8669 which are likely to cap, if reached.
GBP/USD tries to stabilize following last week’s sharp sell-off
GBP/USD’s rise from its early October seven-month low at $1.2038, for six straight days to last week’s $1.2337 high was followed by a sharp sell-off as the Israel/Hamas war led to flight-to-safety flows into the greenback.
A drop through Friday’s low at $1.2123 and the next lower $1.2106 previous Friday low could lead to the early October low at $1.2038 and the psychological $1.20 mark being revisited.
While Friday’s low at $1.2123 underpins, though, Friday’s high at $1.2225 may be retested. If overcome, the late September high at $1.2271 would be back in the frame.
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