EUR/USD Price Analysis: Rising bets for a drop to 0.9630

EUR/USD fades part of the post-CPI sharp upside on Friday.

Next on the downside now comes the weekly low near 0.9630.

EUR/USD gives aways most of its recent advance to the area just above the 0.9800 mark at the end of the week.

The continuation of the pullback appears on the cards and carries the potential to challenge the recent weekly low at 0.9631 (October 13) in the short-term horizon.

In the longer run, the pair’s bearish view should remain unaltered while below the 200-day SMA at 1.0576.

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GBP/USD eases from daily top amid modest USD bounce from one-week low, holds above 1.1400

GBP/USD gains some positive traction on Tuesday, though the uptick lacks bullish conviction.

A goodish USD rebound from a one-week low turns out to be a key factor capping the upside.

Any meaningful downfall seems unlikely ahead of the FOMC and the BoE meetings this week.

The GBP/USD pair builds on the previous day's recovery move from the vicinity of mid-1.1300s, or its lowest level since 1985 and edges higher through the first half of trading on Tuesday. The pair stick to modest intraday gains through the early European session, though seems to struggle to capitalize on the move beyond mid-1.1400s and retreats a few pips from the daily peak.

A combination of factors assists the US dollar to attract some dip-buying following an early slide to a one-week low, which, in turn, acts as a headwind for the GBP/USD pair. Expectations that the Federal Reserve will stick to its faster rate-hiking cycle to tame inflation remain supportive of elevated US Treasury bond yields. In fact, the US central bank is widely expected to deliver another supersized 75 bps rate hike at the end of a two-day meeting on Wednesday.

Furthermore, the markets have been pricing in a small chance of a full 100 bps liftoff, which remains supportive of elevated US Treasury bond yields. The yield on the rate-sensitive two-year US government bond rose to its highest level since November 2007 and the 10-year Treasury note reached a level not seen since April 2011 on Monday. Apart from this, growing recession fears lend support to the safe-haven greenback and also contribute to capping the GBP/USD pair.

Market participants also seem reluctant to place aggressive bullish bets around the British pound amid a bleak outlook for the UK economy. This, to a larger extent, overshadows the prospects for more aggressive rate hikes by the Bank of England, which, so far, has failed to impress bulls or provide any meaningful impetus to the GBP/USD pair. The downside, however, seems cushioned as traders might prefer to move to the sidelines ahead of the key central bank event risks.

The Fed is scheduled to announce its monetary policy decision at the end of a two-day meeting on Wednesday. This will be followed by the BoE meeting on Thursday, which should help determine the next leg of a directional move for the GBP/USD pair. In the meantime, traders on Tuesday might take cues from the US housing market data, which along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the major.

From a technical perspective the pair continues to rest on strong support from a the base of a multi-month falling channel at around the mid 1.13s, and it would require a daily close or open below the lower channel line for an acceleration of the bear trend. In the meantime – and prior to the main event risk of Wednesday's Fed meeting – traders are likely to content themselves with playing the bounce off this key support, scalping short runs as the market revolves.  

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EUR/USD Price Analysis: A deeper pullback could see 0.9859 retested

EUR/USD clocks new cycle lows in the sub-0.9900 zone.

Further losses could test the December 2002 low near 0.9860.

EUR/USD accelerates the daily losses and briefly breaks below the 0.9900 level, or new cycle lows.

Further weakness remains in the pipeline for the time being. Against that, the breakdown of the 2022 low at 0.9899 (August 23) should leave the door open to a probable deeper retracement to the December 2002 low at 0.9859.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0845.

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EUR/USD Price Analysis: Looks side-lined within 1.0100-1.0300

EUR/USD regains poise and approaches 1.0200 on Thursday.

Price action remains stuck with the 1.0100-1.0300 range.

EUR/USD reverses part of the weekly pullback and manages to retest the vicinity of the 1.0200 region on Thursday.

In light of key releases in the US docket on Friday, the pair is expected to keep the current 1.0100-1.0300 range broadly in place for the time being. The loss of the lower bound of the range could see a potential visit to the parity level return to the radar.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0934.

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GBP/USD climbs to fresh daily high, further beyond 1.2200 amid sustained USD selling

GBP/USD regains positive traction on Monday amid the prevalent USD selling bias.

Diminishing odds for more aggressive Fed rate hikes continue to weigh on the USD.

A softer risk tone, rebounding US bond yields to limit the USD losses and cap the pair.

The GBP/USD pair jumps back above the 1.2200 mark during the early part of the European session, attracting fresh buying on the first day of a new week. Spot prices, however, still remain well below a one-month high at around the 1.2245 touched on Friday.

The US dollar languishes near its lowest level since July 5, which is turning out to be a key factor lending support to the GBP/USD pair. Market participants continue to scale back their expectations for more aggressive rate hikes by the Federal Reserve amid worries about an economic downturn. This, to a larger extent, overshadows Friday's stronger US Personal Consumption Expenditures (PCE) and continues to weigh on the greenback.

The British pound in contrast is underpinned by rising bets for a 50 bps rate hike by the Bank of England – though, that said, a combination of factors could cap gains for the GBP/USD pair. The recent optimistic move in the equity markets has run out of steam amid growing recession fears. This, along with a modest bounce in the US Treasury bond yields, should help limit the downside for the USD and act as a headwind for the major, at least for now.

Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of confirmation from the Bank of England policy meeting on Thursday. Apart from this, important US macro data scheduled at the beginning of a new month would determine the next leg of a directional move for the GBP/USD pair. A rather busy week kicks off with the release of the ISM Manufacturing PMI, which could provide some trading impetus to the major.

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When is the Advance US Q2 GDP report and how could it affect EUR/USD?

US Q2 GDP Overview

Thursday's economic docket highlights the release of the Advance second-quarter US GDP report, at 12:30 GMT. Having contracted by 1.6% in the previous quarter, the world's largest economy is expected to return to growth and narrowly avoided a so-called 'technical' recession. GDP likely grew at a meagre 0.3% annualized pace during the April-June period, though some economists anticipate a drop in activity for the second successive quarter.

According to Valeria Bednarik, Chief Analyst at FXStreet, “Macroeconomic data points to heightened downward risks for the economy, particularly figures linked to the last half of the quarter, as spending retreated sharply.”

How Could it Affect EUR/USD?

Ahead of the key release, the US dollar stages a goodish rebound from its lowest level since July 6 touched earlier this Thursday. A stronger GDP print would be enough to reinforce expectations that the Fed would still hike 50 bps at each meeting in the remainder of this year. This would be enough to provide a fresh lift to the greenback and force the EUR/USD pair to prolong its intraday retracement slide from the 1.0235 region.

Conversely, a weaker reading would add to growing market worries about an economic downturn. This might continue to weigh on investors' sentiment and offer support to the safe-haven greenback. Apart from this, concerns about an energy crisis in the Eurozone suggest that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor FXStreet, outlined important technical levels to trade the EUR/USD pair: “The Fibonacci 38.2% retracement level of the latest downtrend forms strong resistance at 1.0230, which is also the upper limit of the 10-day-old trading range. With a four-hour close above that level, the pair could target 1.0300 (psychological level, Fibonacci 50% retracement) and 1.0320 (200-period SMA on the four-hour chart).”

“On the downside, 1.0200 (50-period SMA, psychological level) aligns as initial support before 1.0150 (Fibonacci 23.6% retracement, 100-period SMA) and 1.0100 (psychological level, static level),” Eren added further.

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GBP/USD struggles near two-week low, bears flirts with 1.2100 mark amid stronger USD

GBP/USD came under renewed selling pressure on Friday amid a goodish pickup in the USD demand.

Aggressive Fed rate hike bets, recession fears and the risk-off mood underpinned the safe-haven buck.

Expectations for a cautious BoE and Brexit jitters support prospects for a further depreciating move.

The GBP/USD pair met with a fresh supply on Friday and dropped back closer to a two-week low touched the previous day, with bears still awaiting sustained weakness below the 1.2100 mark.

A combination of supporting factors assisted the US dollar to regain positive traction on the last day of the week, which, in turn, exerted some downward pressure on the GBP/USD pair. The Federal Reserve’s non-stop chatter about rate hikes to curb soaring inflation, along with the prevalent risk-off mood, drove some haven flows towards the greenback.

Speaking at the ECB Forum in Sintra earlier this week, Fed Chair Jerome Powell lifted market bets for more aggressive rate hikes and said that the US economy is well-positioned to handle tighter policy. Powell further added that the Fed remains focused on getting inflation under control and that the market pricing is pretty close to the dot plot.

The Fed's hawkish outlook added to growing market concerns that rapidly rising rates and tightening financial conditions would pose challenges to global economic growth. Apart from this, a further escalation in tensions between the West and Russia - in response to the latter's invasion of Ukraine - has stoked fears of a possible recession.

This, in turn, continued taking its toll on the global risk sentiment and forced investors to take refuge in traditional safe-haven assets, including the buck. The global flight to safety was reinforced by the recent slump in the US Treasury bond yields, which acted as a headwind for the USD and helped limit losses for the GBP/USD pair, at least for now.

The bias, however, remains tilted in favour of bearish traders amid expectations that the Bank of England would adopt a more gradual approach to raising interest rates. Apart from this, the risk of fresh UK-EU tensions over the Northern Ireland Protocol of the Brexit agreement supports prospects for a further depreciating move for the GBP/USD pair.

Market participants now look forward to Friday's US economic docket, featuring the release of the US ISM Manufacturing PMI for a fresh impetus later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and produce short-term opportunities around the GBP/USD pair.

GBP/USD struggles near two-week low, bears flirts with 1.2100 mark amid stronger USD

GBP/USD came under renewed selling pressure on Friday amid a goodish pickup in the USD demand.

Aggressive Fed rate hike bets, recession fears and the risk-off mood underpinned the safe-haven buck.

Expectations for a cautious BoE and Brexit jitters support prospects for a further depreciating move.

The GBP/USD pair met with a fresh supply on Friday and dropped back closer to a two-week low touched the previous day, with bears still awaiting sustained weakness below the 1.2100 mark.

A combination of supporting factors assisted the US dollar to regain positive traction on the last day of the week, which, in turn, exerted some downward pressure on the GBP/USD pair. The Federal Reserve’s non-stop chatter about rate hikes to curb soaring inflation, along with the prevalent risk-off mood, drove some haven flows towards the greenback.

Speaking at the ECB Forum in Sintra earlier this week, Fed Chair Jerome Powell lifted market bets for more aggressive rate hikes and said that the US economy is well-positioned to handle tighter policy. Powell further added that the Fed remains focused on getting inflation under control and that the market pricing is pretty close to the dot plot.

The Fed's hawkish outlook added to growing market concerns that rapidly rising rates and tightening financial conditions would pose challenges to global economic growth. Apart from this, a further escalation in tensions between the West and Russia - in response to the latter's invasion of Ukraine - has stoked fears of a possible recession.

This, in turn, continued taking its toll on the global risk sentiment and forced investors to take refuge in traditional safe-haven assets, including the buck. The global flight to safety was reinforced by the recent slump in the US Treasury bond yields, which acted as a headwind for the USD and helped limit losses for the GBP/USD pair, at least for now.

The bias, however, remains tilted in favour of bearish traders amid expectations that the Bank of England would adopt a more gradual approach to raising interest rates. Apart from this, the risk of fresh UK-EU tensions over the Northern Ireland Protocol of the Brexit agreement supports prospects for a further depreciating move for the GBP/USD pair.

Market participants now look forward to Friday's US economic docket, featuring the release of the US ISM Manufacturing PMI for a fresh impetus later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and produce short-term opportunities around the GBP/USD pair.

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GBP/USD Price Analysis: Recaptures critical trendline resistance at 1.2275

GBP/USD bulls are fighting the bearish odds, re-attempting the upside.

UK political jitters, mixed Retail Sales data could remain a drag on cable.

Cable bulls struggle to yield a break above the key 1.2275 hurdle.

GBP/USD is moving back and forth in a 40-pips narrow range so far this Friday, now attempting another bounce towards 1.2300.

The renewed upside in the major is fuelled by a bout of weakness seen in the US dollar across its main peers, as risk sentiment receives a fresh boost. Easing rate hike expectations from the ECB and BOE amid increasing recession risks is helping calm the market nerves.

Bulls, however, could face a hard time extending the latest uptick, as the UK political jitters remain in play. A senior Tory party member resigned after the ruling Conservative Party lost two crucial seats in the parliamentary by-elections on Friday. The latest news put PM Johnson’s leadership in jeopardy, which could undermine the sterling’s upswing.

Further, the UK Retail Sales for May came in mixed, earlier on, with the previous figures revised downwards. The discouraging fundamentals point to the BOE’s dilemma of fighting inflation while balancing the economic growth. UK Retail Sales drop 0.5% MoM in May vs. -0.7% expected

Attention now turns towards the two-tier data from the US for fresh trading impetus, as risk sentiment is likely to lead the way into the weekly close.

Looking at cable’s four-hour chart, the latest uptick in the price has taken out the falling trendline resistance at 1.2275. Should bulls manage to hold above the latter on a four-hourly candlestick closing basis, a test of the bearish 100-Simple Moving Average (SMA) at 1.2336 will be inevitable.

Ahead of that, the 1.2300 round figure will offer stiff resistance to GBP buyers. The Relative Strength Index (RSI) is pointing higher above the midline, allowing room for more upside.

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GBP/USD struggles to find demand near 1.2350, Powell eyed

GBP/USD stalls its recovery mode just below 1.2350.

US dollar holds the rebound despite the upbeat market mood.

Fed-BOJ policy divergence keeps GBP bulls on the defensive.

GBP/USD is fading its recovery momentum from the daily low of 1.2253, as bulls run into strong resistance just shy of the 1.2350 barrier.

The further upside in the pair remains capped, as investors reassess the BOE’s gradual approach to policy tightening, as it hiked the key rates by 25 bps on Thursday. Meanwhile, the Fed has left doors open for a 75 bps lift-off in July after delivering a 75 bps increase on Wednesday. The BOE remains way behind the curve when compared to the US central bank, which remains a drag on the pound.

“The 10-year UK T-bond yield is down 1.5% and the 10-year US T-bond yield is rising 1%, making it difficult for the pair to preserve its bullish momentum.

Earlier on, the recovery in the major was triggered by the return of risk flows in the European session, reflective of the 1% rally in the S&P 500 futures. Markets ignored the renewed upside in the US dollar, as nerves settle over fears over a potential recession, helping lift the overall risk sentiment.

Looking ahead, the BOE Quarterly Bulletin will be eyed for fresh insights on the economy and monetary policy. Later in the NA session, Fed Chair Jerome Powell’s speech will stand out amid other minority US economic releases.

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Eurozone Economy Grew 0.2% in 1Q; France Stagnates, Germany Avoids Recession

The Eurozone economy grew by 0.2% in the first three months of the year, but its post-pandemic growth weakened sharply toward the end of the period under pressure from the war in Ukraine and record-high inflation.

Eurostat's figures, released on Friday, mean that gross domestic product was up 5.0% from a year earlier, a time when the region's economy was still laboring under the worst of the effects from the pandemic. 

Both figures were largely in line with expectations, but masked some big divergences from consensus among some of the region's biggest member states. French GDP undershot expectations to stagnate in the quarter, while German GDP rose 0.2%, defying fears that it would register a second straight quarter of negative growth, thanks to strong investment spending.

At the same time, Eurostat said that inflation in the Eurozone hit a new record high since the creation of the single currency. Consumer prices rose 7.5% in April, up from 7.4% in March. While the slower rise in the headline rate suggests that an absolute peak for inflation may be near, underlying price pressures remained strong: core CPI rose by over 1% for the second month running, and Eurostat's harmonized measure of annual inflation excluding food and energy accelerated far more than forecast to 3.9% from 3.2% last month.

The euro rose by around half a cent against the dollar in the course of the morning as national GDP data were published in advance of the Eurozone numbers. By 5:20 AM ET (0920 GMT), it was at $1.0576, up 0.8% on the day. A bounce in Chinese assets in response to promises of more economic policy support from Beijing had also helped sentiment toward the euro and to risk assets more broadly.

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