- The current “risk on” phase that continues to be displayed by the major European and US equity indices has been accompanied by a strong US Dollar.
- The US currency has been steadily advancing through the second half of April and more erratically since March against many major global currencies, which has been at least partially in reaction to strong US economic data, but with ongoing concerns of a slowing global economy.
- Here we highlight this US$ strength, by underscoring ongoing weakness in the EURUSD and GBPUSD Forex rates.
EURUSD bear forces intact
An erratic session Friday with another push lower to 1.1109, to reinforce Thursday’s probe through an important support level from June 2017 at 1.1119, plus Wednesday’s plunge through the multi-month low at 1.1175, and despite a rebound effort, whilst below 111.74 to keep risks lower for Monday.
The latter April plunge through 1/.1175 set an intermediate-term bear trend.
- We see a downside bias for 1.1109 and 1.1081; break here aims towards 1.1039.
- But above 1.1174 opens risk up to 1.1192, maybe towards 1.1229.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.1119.
- Lower targets would be 1.1000 and 1.0839.
- What Changes This? Above 1.1324 shifts the intermediate-term outlook straight to a bull theme.
4 Hour EURUSD Chart
GBPUSD bear theme
A consolidation Friday after Thursday’s push down through February support at 1.2890, that reinforced last week’s failure from resistance at 1.2964 and prior surrender of key 1.2947 support, to keep risks lower for Monday.
The latter April probe below 1.2947 signalled an intermediate-term Double Top pattern and set an intermediate-term bear trend.
- We see a downside bias for 1.2864; break here aims for 1.2830/25, maybe 1.2771.
- But above 1.2964 opens risk up to 1.3019, maybe 1.3050.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.2771.
- Lower targets would be 1.2437, 1.2366 and 1.2109
- What Changes This? Above 1.3196 is needed to shift straight to a bull theme.
4 Hour GBPUSD Chart