The U.S. dollar continued its recovery against all major currency pairs and thus, pairs like EUR/USD and GBP/USD trended lower at the start of this week. While short traders were able to book a profit yesterday we recommend a cautious approach when expecting further bearish momentum. On so-called ‘turn-around Tuesdays’ there is a risk that we may see some pullback following Monday’s decline.
GBP/USD: The cable broke below the psychological level of 1.40 and, as mentioned in our yesterday’s analysis, chances could be in favor of the bears now. A next lower target could be around the 1.39-barrier and if 1.39 breaks, the pound may drift lower towards 1.3830/00.
For bullish momentum to accelerate, the pound would need to climb back above 1.4030.
As for the EUR/USD, we still see the pair trading within its recent sideways trading range while remaining above 1.2335. As long as 1.23 holds, we anticipate pullbacks towards 1.2430/40. Higher resistances are seen at 1.2480 and 1.2540. If the euro, however, falls below 1.2290, we expect further losses towards 1.22.
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