Forex Video Briefing (8/26) – EUR/USD, GBP/USD, USD/JPY
As we can see in the 1H EUR/USD chart, the pair is holding above 1.3180 but respecting the 1.3215 level as resistance. The technical picture is still bearish based on the moving averages and the RSI reading, so price looks poised to test the 1.3180 area again. A break below 1.3175 should continue the prevailing bearish outlook, which has downside risk to the Sept. 2013 lows in the 1.31-1.3105 area. A break above 1.3215 can open up a near-term bullish correction scenario, but we should be ready for sellers around 1.3140 especially if the 1H RSI is around 60.
The GBP/USD fell to 1.6535 to begin the week, then rebounded to the 1.66 handle, which was a support/resistance pivot. throughout last week. So far this week, traders are respecting this level as resistance and keeping a bearish bias. The 1H RSI has shown some loss of bearish momentum, but there surely isn’t any bullish momentum. Cable looks poised to test the 1.6535 low. A break below 1.6530 should open up the March low at 1.6465. A break above 1.66 opens up a bullish correction scenario in the near-term, and we should expect sellers around the 1.6650-1.6660 area if not even lower. If then, we start finding support at 1.66, we can expect a short to medium-term consolidation or bullish correction. A break above 1.6740 might be needed to shelve the bearish bias.
USD/JPY began the week breaking above the 1.0413 high from early April. However, we saw a retreat back to 103.75. As we get into the 8/26 US session, price seems to be reviving the bullish outlook as it broke above the near-term consolidation trendline, and above the 50-hour SMA. Now price, moving averagse, and the RSI reading are in bullish condition, so USD/JPY looks poised to test the 104.27 high. The bullish outlook is intact and the upside risk above 104.30 will be the 105.44 high on the year. It will take a break below 103.50 to suggest a consolidation, bearish correction before the rally attempt to 105.44. Instead, we might start seeing support around 104, which would help build the case toward 105.44.