EUR/USD and EUR/GBP remain bid while greenback nears support

EUR/USD struggles around the 55-day simple moving average

EUR/USD’s near 4% rally from its mid-May $1.035 low has so far taken it to a one-month high at $1.077 as US core personal consumption expenditure (PCE) price inflation continues to slow down. The cross seems to be struggling around the 55-day simple moving average (SMA) at $1.077 as US markets are shut due to Memorial Day with quiet trading expected to be seen in currency markets today.

With the Federal Reserve (Fed) considering a pause in its rate rises after its July meeting to assess the impact of its policy tightening, the cross may continue to gradually advance towards the March low and February-to-May downtrend line at $1.0806 to $1.0816 which is likely to cap.

If not, the late-April high at $1.0936 would be next in line. Minor support continues to be seen between the three-week support line and last Wednesday’s low at $1.0668 to $1.0643.

EUR/GBP continues to oscillate around the £0.85 mark

EUR/GBP faltered at £0.8587, last week, marginally below the £0.8618 mid-May peak, before it rapidly came off following record low German GfK consumer confidence data. Last week’s low at £0.848 held throughout the week, though, with the cross heading back up again today, following a long Ascension Day holiday weekend in Catholic Europe.

The 16 May high at £0.8534 is back in the picture, a rise above which would lead to the £0.8587 to £0.8618 resistance area being revisited.

Support below the recent £0.8480 low can be found between the two-month support line and the 200-day SMA at £0.845 to £0.8445.

US Dollar Index nears the 55-day simple moving average

The US Dollar Index’s (DXY) swift two-week decline from its $104.91 mid-May high is losing downside momentum slightly above the 55-day SMA at $101.01 and the late-April high at $100.92 as investors are becoming increasingly hopeful that the Fed might not raise rates as aggressively as previously anticipated.

The $101.01 to $100.92 region is expected to offer support this curtailed week with the US enjoying a long weekend due to its Memorial Day holiday. Further down lies strong support in the $99.7 to $99.46 region, consisting of the March high, mid- and 21 April lows.

Minor resistance above the two-week downtrend channel resistance line at $101.81 comes in between the 5 May low and 25 May high at $102.25 to $102.29. Only a rise above this minor resistance area would indicate that the previous uptrend has resumed.