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Downside correction risks for EURUSD and GBPUSD

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Updated:

  • A slightly firmer tone has emerged for the US Dollar since mid-September, particularly in the wake of a more hawkish tone from the FOMC after their Wednesday 20th September meeting.
  • For EURUSD, this US$ strengthening is now threatening a deeper correction to the downside below 1.1837 and 1.1821 levels and a break of Neckline support for a small Head and Shoulders pattern.
  • Erratic activity for the GB Pound last week and although the intermediate-term outlook remains bullish, the very short-term risk for late September is for a downside corrective tone.

EURUSD – Downside threat

A spike higher Friday through 1,1950/55 resistances, but a setback for a negative Shooting Star candlestick, sustaining negative pressures from Wednesday’s aggressive sell off after the Fed Meeting through support at 1.1913, keeping the risks for another correction lower Monday

Growing risk is now for a push below supports at 1.1837 and 1.1821, through which would also see a break of Neckline support for a Head and Shoulders pattern, neutralising the intermediate term bullish theme.

For Today:

l We see a downside bias for 1.1860; break here aims for key levels at 1.1837 and 1.1821, maybe 1.1772.

l But above 1.2005 opens risk up to 1.2034 and maybe 1.2089.

Intermediate-term Outlook – Upside Risks:

l We see a positive tone with the bullish threat to 1.2000, 1.2173, maybe closer to 1.2600/02.

What Changes This? Below 1.1821 signals a neutral tone, only shifting negative below 1.1661.

4 Hour EURUSD Chart

EURUSD Chart

GBPUSD – Negative correction bias

A more negative tone after May’s Brexit speech Friday, aiming for our 1.3448/34 support area, with risks for a more negative correction Monday.

The September surge through 1.3269 signalled an intermediate-term bullish tone.

For Today:

l We see a downside bias for 1.3448/34; break here aims for 1.3380, maybe 1.3305.

l But above 1.3596 opens risk up to challenge the cycle peak at 1.3658.

Intermediate-term Outlook – Upside Risks:

l We see a positive tone with the bullish threat to targets 1.3841 and1 .4000.

What Changes This? Below 1.3147 signals a neutral tone, only shifting negative below 1.2903.

4 Hour GBPUSD Chart

GBPUSD Chart