The GBP/USD pair rose above 1.55 levels as the European markets woke up to another five years of the Conservative government. Contrary to widespread belief of a hung parliament, the conservatives are leading the way ahead. Current predictions from the BBC have the Conservatives on 323 seats, which would be enough for an overall majority. The pair recovered from the low of 1.5162 seen in the previous session to trade at 1.5512. Given that we are almost through with the UK election uncertainty, the focus would not shift to the US non-farm payrolls report for April due for release later today. A weaker-than-expected print could send the GBP/USD pair higher to 1.5620 levels. On the contrary, a positive surprise is likely to push the pair back to 1.54 levels.
The pair currently trades above its 200-DMA located at 1.5455 with further gains being capped around 1.5520 levels. The RSI indicator on intraday time frames has hit the overbought zone, indicating a possibility of a correction. A failure to sustain above the previous high of 1.5490 on the hourly chart would confirm a bearish RSI divergence, thereby opening doors for a drop to 1.5450-1.5400 levels. Fresh bids could be seen around 1.5400 ahead of the NFP report. Meanwhile, fresh bids could also be seen in case the pair manages to hold above 1.5490. In both cases, the immediate upside appears capped around 1.5620 levels. Overall, the outlook stays bearish so long as the pair fails to print a daily close above 1.5620 levels.
EUR/USD Analysis: Bearish piercing candle with daily close below key Fib level
The EUR/USD pair was rejected at the intraday high of 1.1390 on Thursday post which the currency pair extended losses to hit a low of 1.1227. The EUR sell-off begun after the Greek government spokesperson said the country would stick to its “red line” electoral promises – labour and pension issues are non negotiable. This was accompanied by EU’s Dijsselbloem stating a very low probability of a deal on Monday. The losses were extended further after the weekly jobless claims in the US in the last week stayed near 15-year lows, which pushed the 4-week moving average of the claims to a 15-year low. The currency pair extended the drop to a low of 1.1196 in the Asian session today due to selling in the EUR/GBP cross. Attention now shifts to the US non-farm payrolls data due for release later today. A better-than-expected data, coupled with Greece issue could mean a near-term top in the pair around 1.1390. A strong data could push the pair back to 1.10 levels.
On the daily charts, we see a bearish piercing candle formation resulting in a daily close well below the 23.6% Fib retracement of the larger down trend from 1.3991-1.0461 located at 1.1293. the pair is currently struggling to rise above 1.1223 (hourly 100-MA). Repeated failure to do so could send the pair lower to 1.1150 (hourly 20-MA). On the other hand, a break above 1.1223 could see the pair re-test 1.1293. The outlook could turn bullish once again, in case, the pair manages to print a daily close above 1.1293 levels.
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