The broad based sell-off in the USD due to another round of tepid economic data in the US pushed the GBP/USD pair to an intraday high of 1.4968 on Thursday. With four consecutive days of gains, we are back near 1.5 levels. Since mid-March, the pair has repeatedly failed near 1.5 levels. At 1.4927, the pair isn’t far away from the resistance zone of 1.4970-1.5. However, the break above 1.5 levels would require solid UK employment figures. The jobless claims are seen at -29.5K in March, compared to -31.0K in February, while the unemployment rate is seen ticking lower to 5.6%. A greater than expected fall in jobless claims could drive the pair higher to 1.5 levels. However, for the pair to sustain above 1.5 levels, it is essential that weekly earnings rise. Average weekly earnings ex-bonus are seen rising to 1.7% from 1.6% earlier. In case, the hourly earnings disappoint, the pair is likely to be sold on rally triggered by upbeat jobless claims. Moreover, it would require a solid employment report in order to push the pair over and above 1.5 levels amid rising election uncertainty.
On the charts, we see the pair has breached a minor falling trend line in the previous session. The four-day rally has also pushed the daily RSI above 50.00 levels. Given the sharp gains, the pair is showing signs of profit booking, although immediate losses appear capped at the trend line support at 1.4906. The hourly RSI has turned lower from the overbought zone, which could see the pair re-test 1.4906 levels. In case, the pair manages to sustain above the same, we are likely to see another attempt being made at 1.5 (50-DMA) levels. At the moment, the pair is trading just below 1.4939 (38.2% Fib retracement of 1.5550-1.4564). Even in the previous session, the pair failed to sustain gains above the same. Thus, a break above 1.4939 could trigger fresh demand for Pounds. However, the move towards 1.5 is contingent to some extent on the nature of UK data. In case the pair drops on weak data, then we are likely to see a beginning of a fresh move towards 1.45 levels in the days ahead.
EUR/USD Forecast: End of short squeeze
The pair rose to an intraday high of 1.0816 on Thursday as the shorts continued to get squeezed, partly aided by a weaker US economic data. The move was largely a technical driven, since the German benchmark 10-year yield hit new record low of 0.085%, while its US counterpart stayed more or less steady around 1.9%. However, the short squeeze could end ahead of the weekend if the Eurozone CPI figures disappoint expectations. Year-on-year the CPI in March is expected to remain unchanged at -0.1%, while month-on-month the CPI is expected to rebound to 1.15 from 0.6% in the previous month. An uptick in the inflation could see the pair re-test its 50-DMA at 1.0887. However, a weaker-than-expected data is likely to stall the rally around 1.07 levels.
On the charts, we see the pair closed the previous session above the double top neckline at 1.0711. Still, the daily RSI is bearish indicating possibility of a correction today. On the 4-hourly chart, the 200-MA currently located at 1.0777 has acted as a strong resistance. The pair has failed to sustain gains above the same since the North American session yesterday. Thus, a 4-hour closing above the same could open doors for 50-DMA at 1.0887. On the other hand, a break below 1.0756 could drive the pair lower to 1.0711 levels. The immediate losses appear capped around 1.07-1.0711 levels. The Greek uncertainty is still on the table and fresh news regarding the same could weigh over the pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.