Euro And Cable: U.S. Dollar Correction Ahead?
We saw a strong U.S. dollar rally following the U.S. election but a correction seems to be inevitable now, which is why caution is warranted when chasing the current rally much further. However, the overall momentum remains bearish in both currency pairs and with the incoming U.S. President Donald Trump policy mix, the markets will probably favor a strong dollar.
We have penciled in the next lower targets in both EUR/USD and GBP/USD.
EUR/USD: The euro dropped until the crucial support at 1.05 from where it took a breather. Since the 1.05 area is seen a strong support, we marked a next lower target at 1.0460 but remain cautious in terms of further lower targets for now. On the upside, an important resistance is seen at 1.0770.
GBP/USD: Remaining below 1.27 would see increased odds for a further leg down towards 1.23 and probably even 1.20. If the cable is, however, able to stabilize above 1.28, the trend would return to neutral.
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