somrat4030
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Mar-17, 2022, Currency trading weekly analysis and forex market forecast, By forex forum.
EUR/GBP pair was given another boost by the Bank of England on Thursday, despite the MPC agreeing on a third consecutive rate hike taking the base rate to 0.75%.
What weighed on the pound and, therefore, lifted this pair was the fact that one policy-maker, Deputy Governor Jon Cunliffe, voted against raising interest rates, while the committee also tweaked the accompanying text to appear moderately less hawkish.This has dragged on the pound today and allowed EUR/GBP to hit its highest level since early February. And this may be where the pair could start to run into some resistance. The momentum indicators on the 4-hour chart don't suggest they will but it will be interesting to see how they look over the coming days as this was an unexpected event-driven reaction that may not be enough to carry it much further.
The area between 0.8450 and 0.85 is littered with potential resistance points from prior levels of support and resistance to the 200/233-day simple moving average band. Rallies have repeatedly failed around this band since the pair broke below here at the start of last year so a break above here would be very significant.
Source: https://www.investing.com/analysis
Moreover, In last week's Euro Price Outlook we noted that, "EUR/USD has rebounded off downtrend support and we're looking for a reaction on a stretch towards downtrend resistance for guidance." The stretch continues with Euro now more than 3% off the monthly / yearly lows. The focus now shifts to initial resistance here at the 75% parallel with key resistance eyed just higher at the 100% extension / December low / 61.8% Fibonacci retracement of the year-to-date range at 1.1215/31- looking for a larger reaction there if reached with the near-term outlook higher while within this channel (red).
A closer look at Euro price action shows EUR/USD trading within the confines of a near-term ascending pitchfork formation extending monthly lows. A breakout above the median-line today keeps the focus on the upper parallels (near ~1.1180s) and key resistance at 1.1215/31- ultimately a breach / close above the February uncovered gap close at 1.1271 would be needed to validate a larger reversal. Initial support now rests at 1.1043 with near-term bullish invalidation raised to the lower parallel around currently ~1.10. A break below weekly open support at 1.0919 would be needed to mark resumption of the broader downtrend towards 1.0814/31.
On the other hand, AUD/USD is staying in consolidation from 0.7440 and intraday bias remains neutral first.
Further rally will remain in favor as long as 0.7093 support holds. As noted before, larger decline from 0.8006 might have completed at 0.6966 already. Above 0.7440 will resume the rise from 0.6966 for 0.7555 resistance next. However, firm break of 0.7093 will dampen this bullish case and bring retest of 0.6966 low instead.Moreover, The AUD/JPY risk barometer in the FX space rallies for the second straight day in the week and reached a four-year-high at 87.58 before retreating under 87.50 amid an upbeat market mood. At 87.49, the AUD/JPY reflects the abovementioned, after the US central bank paved the way for higher borrowing costs.
On Wednesday, the Federal Reserve hiked rates for the first time in three years, increasing the benchmark rate by 25 bps, and trimmed its economic growth projections for the remainder of the year, 2023 and 2024. Furthermore, policymakers expect inflation to peak around 4.1%, to decrease near the bank's target at 2.3% by the end of 2024.
Elsewhere, The GBPUSD pair has been moving within the depicted bearish channel since July. Bearish extension took place towards 1.3220 where the lower limit of the current movement channel came to meet with Fibonacci level.
Shortly after, BUYERS were watching the price levels of 1.3730 to have some profits off their trades as it stood as a key-resistance which offered significant bearish rejection recently.
The short-term outlook turned bearish when the market went below 1.3600. This enhanced the bearish side of the market towards 1.3400 which brought the pair back towards 1.3600 for another re-test.
Hence, the recent bullish pullback towards 1.3600 should have been considered for SELL trades as it corresponded to the upper limit of the ongoing bearish channel. It's already running in profits. Bearish persistence below 1.3220 may enable further downside continuation towards 1.2960 (the lower limit of the movement channel).
Bullish rejection was anticipated around 1.3000, please note that bullish breakout above 1.3250 enables quick bullish advancement towards 1.3400.
GBP/USD OVERVIEW
Today last price 1.3166
Today Daily Change 0.0017
Today Daily Change % 0.13
Today daily open 1.3149
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On the other hand, Comments from US Secretary of State Blinken are crossing now and they have a slightly ominous tone as he notes that China might be considering sending arms to Russia. He also said that Putin's comments yesterday suggest he's headed in the opposite direction of diplomacy.
I don't see a strong rhyme or reason to the dollar moves since the Fed, which was undoubtedly hawkish. Yields are now tracking higher again with the US 30-year bond up 1.5 bps on the day to 2.47% from as low as 2.36%.
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