EURUSD Gains Should Be Limited As Sentiment Still Favor Sellers
- US dollar took a hit overnight against most other major currencies, including the Euro, British pound, New Zealand dollar and the Australian dollar.
- Australian HIA/AiG Performance of Construction Index was released by the Australian Industry Group and the Housing Industry Association during the Asian session, which registered an increase from 55.0 to 59.1.
- EURUSD pair managed to settle above the 1.2600 area, but there is a lot of resistance ahead for the Euro buyers.
- British pound forming a breakout pattern against the Swiss franc, which might ignite solid moves in the near term.
The Euro formed a perfect curve pattern against the US dollar and climbed higher to challenge the 1.2660 resistance area. There was a broken bullish trend line, which acted as a resistance for the EURUSD pair. The most important thing was that the 200 hourly moving average was also sitting around the same trend line. The pair failed to overtake the mentioned resistance area and currently trading lower. It broke the 100 moving average on the hourly timeframe, which might act as a support in the near term. There is a chance of one more spike towards the 200 moving average, and if the pair fails to break higher again, then it might dive lower towards the 1.2550 area.
Intraday Support Level – 1.2600
Intraday Resistance Level – 1.2660
- Overall, as long as the pair stays below the 200 moving average it might move lower again.
- A break and close above the 1.2660 level would call for a larger correction moving ahead.
If the EURUSD pair manages to clear the 200 hourly moving average, then it might be considered as a bullish call. However, the hourly RSI has turned down sharply after reaching the extreme levels. We need to wait and see how it reacts when it reaches the 50 mark in the short term.
The British pound was mostly seen consolidating against the Swiss franc. The GBPCHF pair is forming an ascending channel on the hourly chart, as can be seen in the chart attached. It looks more like a bearish flag, as the pair is trading below both the important moving averages – 100 and 200. Currently, the British pound buyers are trying to protect the channel support area. So, a push towards the moving average confluence area is possible, which could act as a resistance in the near term. If the pair fails to clear the mentioned confluence area, then it is possible that the pair might break the channel support area to trade towards the 1.5370 level.
Intraday Support Level – 1.5400
Intraday Resistance Level – 1.5440
- A break and close above the 100 and 200 moving average confluence would be very critical.
- As long as the pair stays below the 1.5440 area more losses are likely in the short term.
Today, the UK manufacturing and industrial production data will be published during the London session. The market is expecting a minor gain this time around, so it would be interesting to see how the outcome shapes out.
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