GBP/USD could stage a rally as a correction of its steep downtrend. The market decided that the US credit market crisis will have its spillover effect in UK and the GBP sell off started two and a half months ago. The current correction reached the 1.9850 resistance and may go as far as 2.0030, which is 38.2% retracement of the down move. Break below 1.9470 will give the start of a new leg lower towards 1.9336 and 1.9180.
EUR/USD is in range for the last 3 months. Technically the uptrend is still intact, but the fundamentals are changing. Almost all the bad news for the US economy are priced in. Everybody knows that the FED will continue to cut rates. The question now is when will see the spillover effect of the subprime crisis to the EU economy. First support is 1.4650, then 1.4510. If the market breaks below 1.4310 it will form a double top on weekly chart with target around 1.37. First resistance is 1.4780, the 1.4920. If the market breaks the all time high @ 1.4967 the magical 1.5000 will be difficult to overcome for the run towards 1.5200. The big guys know their game and probably the Big figure will be broken some Sunday night.
EUR/USD broke below the 1.4590 support. Technical indicators are in negative territory. Next downside targets are 1.4310, 1.4120, 1.4010.
The FX market is a little messy. Some EUR “bulls” tried to make new lifetime high but could only push EUR/USD to 1.4921. Strong offers from various names capped the move. Among the sellers were again the guys from a Swiss private bank, so expect a new leg down probably towards 1.4640 and then 1.4570. Probably some market participants realize that the problems in US and the strong EURO will affect the European economy whcih can be easily seen in the ZEW index. Whatever, the market is on the crossroads. If the lifetime high is taken out we can see a move to 1.5200. If the market goes below 1.4640 the EUR/USD can revisit it’s December 2007 lows @ 1.4310.
GBP/USD chart looks bearish as it can be, but the bears should sell with some caution. Some indicators show divergence and the Slow Stochastics is breaking up through the signal level. A correction towards 1.9750 is possible before the next leg down to the 1.9180 support.
Russian names sales helped the GBP/USD to break strong support @ 1.9650 and reazh 9 mont low against the USD and new life time high against EUR. Next support is 1% MA envelope @ 1.9600 and the daily Bollinger band @ 1.9510. If BoE cuts the rates tomorrow expect further weakness although the oversold conditions.
The market is becoming normal after final months of the last year. EUR/USD broke the flag formation to the upside after the NFP was released last Friday. Obviously the overbought conditions prevented another leg up and now the market is consolidating on intraday basis. Move and close above 1.4824 will lead to test of the all time high @ 1.4967. If the support around 1.4650/60 is broker next target is 1.4570 and then we can see a deeper correction towards 1.4200. Today the swiss names were on both sides of the market.
EUR/USD yesterday made first attempt at the 1.4770-80 resistance. This attempt was unsuccessful. Dealers report offers form Swiss bank and I’d like to remind that orders from this bank preceded every market move in the recent weeks. So be careful with EUR longs. If the resistance is taken out we could expect a rally towards 1.4860 and 1.4970. The market is overbought and if we don’t see negative surprise for the NFP today e correction towards 1.4560-70 is more likely before the next leg higher.
The EUR rally off mid December lows extended towards the strong resistance $ 1.4770-80. If this level is cleared a flag formation will be completed and the measured target will be around 1.5300. If the resistance holds we can expect retracement to 1.4280.
