EUR/USD and GBP/USD likely to fall back

EUR/USD and GBP/USD look primed for another leg lower over the short term.

EUR/USD starts to weaken after recent rally

EUR/USD has seen sharp gains throughout the past week, with the pair hitting a four-month high on Tuesday. We have seen a tentative signal that this rally could reverse in the short-term, however, bringing about another downward retracement.

The recent creation of lower highs and lows seen since that $1.1239 peak signals a potential bearish phase coming into play. A drop below $1.1181 would provide a more confident signal of such a move. For now, watch whether we see a break through the $1.1224 swing-high or not. Should that break occur, we would look likely to come back into a more bullish outlook. Until then, another leg lower looks likely today.

GBP/USD at risk of another leg lower

GBP/USD has similarly been gaining ground over the past week, yet the decline seen overnight signals a potential downward retracement coming into play.

With the current price action providing a very minimal rebound, this looks likely to resolve in another leg lower. As such, a deeper retracement looks likely from here, with a bearish picture in play for today unless we see a rise through the $1.3268 level.

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