While the British Pound continued to weaken against the U.S. dollar, the euro tested the 1.08-barrier which lends a short-term support for the currency pair. The big question ahead the FOMC meeting next week is whether the euro will remain comfortable above this zone or will rapidly fall back towards 1.05. A Federal Reserve interest rate hike is priced into the market, which is why we expect downward pressure to be limited in the coming days. However, the odds are in favour of the USD and we will be looking for lower targets at 1.0750 in the EUR/USD and 1.5020/00 in the GBP/USD.
EUR/USD: Breaking below 1.0730 may prompt the EUR/USD for a test of 1.07/1.0690. Current resistances are seen at 1.0860 and 1.09. Euro bulls should be looking for a sustained break above 1.09 targeting higher levels at 1.0940.
GBP/USD: GBP is trending downwards but where could be a next stop? We consider the 1.50-mark as a crucial support for the pair. Once this level is breached to the downside, the next stop could be at 1.4950 and 1.4920. On the upper side, the 1.5080-level may act as a resistance for sterling. Above 1.51 a bullish target could be at 1.5150.
Important data for today which could impact on the currency pairs:
9:30 UK Industrial & Manufacturing Production
10:00 EUR Eurozone GDP
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