GBP/USD ended last week at 1.4120 levels. Cable may have breached smaller falling trend lines on the hourly chart, although a larger one drawn from Mar 30 high-Mar 31st high still intact. Currency pair attempted a break above 1.4154 (38.2% of 1.4668-1.3835) in Asia but failed.
The data calendar in UK is empty, hence the pair finds itself the mercy of action in the GBP/JPY cross. Later in the day, comments from Us treasury secretary Jack Lew and Fed’s William Dudley could influence broad based demand for the Us dollars.
Technicals – Strong resistance at 1.4170
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Sterling’s breach of smaller falling trend lines on the hourly chart, coupled with a rise in hourly RSI above 50.00 indicates the currency could be heading higher to 1.4170 (larger falling trend line hurdle).
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However, 1.4154 (38.2% of 1.4668-1.3835) has acted as a strong resistance in Asia and needs to be taken out to ensure a rise to 1.4170.
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Meanwhile, a rejection at 1.4154 if followed by a break below support at 1.4086 - 1.4068 could result in a quick fire drop to 1.4032 (23.6% of 1.4668-1.3835).
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Short-term outlook is neutral unless prices break above 1.4170, in which case further acceleration towards 1.4218-1.4258 cannot be ruled out.
EUR/USD Analysis: Awaits range breakout
EUR/USD consolidation is now more than a week old as the common currency finds itself stuck between EUR/JPY sell-off and EUR/GBP rise. Given the economic calendar in Europe is empty, there is very little reason for the consolidation to end unless EUR/JPY cross selling regains pace or EUR/GBP cross resumes uptrend (possibly on Brexit fears). At the moment, the pair is attempting to cut through 1.1418 (23.6% of Mar 2015 low-Aug 2015 high).
Technicals – Bullish above 1.1418
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Euro’s hourly closing above 1.1418 (23.6% of Mar 2015 low-Aug 2015 high) along with a bullish hourly RSI would open doors for a break above last week’s high of 1.1454, in which case the bird my fly to 1.15 handle.
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On the contrary, a failure to take out/sustain above 1.1418 followed by a drop below 1.1376 (hourly 200-MA) would shift risk in favor a drop to 1.1327 (last week’s low). A violation there would mark a bearish break from sideways channel and may result in a drop to 1.12 levels.
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