Forex Video Briefing (10/1) – EUR/USD and EUR/GBP Ahead of ECB
EUR/USD is consolidating this week after an initial dip to a new low on the year at 1.2571. However, it is still holding below the 50-hour simple moving average and holding below 1.2640 so far. Now, if we get a push above 1.2640 today, there should still be resistance in the 1.2670-1.2675 area, which represents lows from a previous mini-consolidation as well as the 100-hour SMA. Also, if EUR/USD is to maintain its bearish momentum ahead of the ECB event, the 1H RSI should hold below 60. Now, after the ECB event, if price holds below 1.27, or comes back down after a brief break, the bearish outlook should remain. A break and hold above 1.2715 however can be a sign that EUR/USD is finally consolidating, or in a bullish correction.
The EUR/GBP is in a similar bearish set up as EUR/USD is in the 1H chart. After a new low on the year at 0.7766 to start the week, EUR/GBP rallied to 0.7795, which has held as resistance in this week’s consolidation. If price pushes above 0.78, we have some initial signs of bottoming. If price can stay above 0.78 after the ECB event, we should look at the 0.7830 area as the next key resistance. Above that, EUR/GBP would signal a bullish correction. Otherwise, if price holds below 0.78 or comes back down below it immediately after a break, the bearish outlook remains in play. It should be noted that 0.7764 is the 2012-low, so if price breaks below this support, EUR/GBP would be continuing a downtrend with risk towards at least the 0.7693-0.77 lows from Oct. 2008.