While concerns over French elections have disappeared after the market-favorable Macron victory, the euro’s response was anything but enthusiastic. Rather, the single currency favored lower price targets near 1.0915 after having rejected the 1.10-resistance. Euro traders should now pay attention to the 1.0890-support level which may prove to be the new lower bound of the euro’s current upward trend channel. If the 1.0890-support gives way to bearish pressure, the focus shifts to a break of 1.0850 and further 1.0820. On the topside we will pay attention to a potential re-test of 1.10 which could result in a sustained bullish breakout. In the absence of catalyst to spur further momentum we expect the EUR/USD to trade between 1.10 and 1.0895.
The GBP/USD did not move much and traded within a narrow 55-pips trading range. Ahead of the BoE’s quarterly inflation report on Thursday sterling traders may refrain from taking any risks, which is why we anticipate sideways movements between 1.30 and 1.2860. In short-term time frames we expect a next support at around 1.29, whereas a lower resistance could be at 1.2975.
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