The US Dollar dropped from its highs but remains strong. What’s next? Here are the levels to watch.
Here is their view, courtesy of eFXdata:
EUR/USD: Bearish (13 Aug 18, 1.1400): Room for further weakness in the coming days.
We have held the same view since Monday (13 Aug, spot at 1.1400) that there is “room for further weakness” in EUR and the price action since then coincides with our expectation. EUR dipped to an overnight low of 1.1297 and as highlighted yesterday (15 Aug), the next ‘target’ at 1.1285 is likely within reach this week. That said, short-term indicators are at severely ‘oversold’ levels and this coupled with signs of momentum waning could lead to a couple of days of consolidation first. In other words, we do not expect the next major support at 1.1185 to come into the picture so soon. On the upside, the current ‘stop-loss’ level remains at 1.1460 even though 1.1430 is likely strong enough to cap any bounce in EUR within the next couple of days.
GBP/USD: Bearish (since 09 Aug, spot at 1.2885): Still bearish but risk of an interim low has increased.
We have been bearish GBP since late last week (see update on 10 Aug, spot at 1.2825) and highlighted on Monday (13 Aug, spot at 1.2760) that “the revised ‘target’ of 1.2675 appears to be within reach sometimes this week”. In line with expectation, the ‘target’ was exceeded in overnight trading as GBP dropped to a low of 1.2662. While the outlook is still clearly bearish, GBP has moved deeper into oversold territory and the risk of an interim low has increased. However, only a break of 1.2840 (no change in the ‘stop-loss’ level) would indicate that a low is in place. Shorter-term, a move above 1.2780 would further increase the risk of an interim low. To put it another way, GBP has to ‘punch’ and hold below the near-term support at 1.2645 within these 1 to 2 days or the next ‘target’ at 1.2590 could be out of reach this time round.
