EUR/USD Tests Key Support as GBP/USD Continues to Chop

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EUR/USD Tests Key Support as GBP/USD Continues to Chop

EUR/USD has been trying to break last week’s high (caused by the FOMC-reaction-spike) at 1.1040. However, price has been holding under 1.10 for the most part and retreated during the 3/26 session.

EUR/USD 4H Chart 3/27
eurusd 4h chart 3/27
(click to enlarge)

The 4H chart shows the decline that has now brought EUR/USD to a key support around 1.08. Note that price is trying to break below last week’s rising speedline. This area is also reinforced by the 50-period SMA. Furthermore, the RSI is holding at 40, which reflects maintenance of the bullish momentum.

If price can climb back and close above 1.09 to end the week, EUR/USD would still have pressure on the 1.1040 high. However, if price closes below 1.08, we are likely going to see an attempt at least towards 1.06 if now back to the 1.0462 low on the year, especially if the 4H RSI falls back below 30, which would be a signal of revived bearish momentum.

GBP/USD 4H Chart 3/27
gbpusd 4h chart 3/27
(click to enlarge)

After making a high at 1.5165 last week, GBP/USD has been coiling a bit and ended up consolidating under 1.50 with support sliding from 1.4850 down to 1.48 today. The 4H chart shows buyers at 1.48 trying to keep cable at the crossroads.

Now, the pressure is back on 1.50. If price breaks above 1.50, then there would be a near-term bullish bias towards the 1.5165 area, which is also near where the 200-period SMA resides.

Note that the RSI has not cleared 60, which reflects maintenance of the prevailing bearish momentum in spite of last week’s sharp spike. So, if price does not close above 1.50 to end the week, GBP/USD still have a bearish bias.

Failure to reach 1.50 could be a sign that bulls are exhausted in the near-term. The pressure would be on 1.48, then the 1.47 common support pivot, with risk of testing the 1.4635 low in an attempt to extend the prevailing downtrend.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.