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EURUSD and GBPUSD Upside Risks as US Dollar Weakens

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  • The US Dollar suffered notable losses into the middle of October, last week reaction to both concerns from the Fed Meeting Minutes regarding the absence of inflation in the US economy, alongside Friday’s disappointing Consumer Price Index data.
  • This activity points to a potential for further U$ weakness into the second half of October, leaving the bias for both EURUSD and GBPUSD to the upside.
  • Furthermore, with the Catalonian President signalling likely talks with Spain regarding independence, this has helped the Euro rebound.
  • For the GB Pound, the easing of political tensions within the Conservative Party alongside some potentially positive rumours regarding Brexit from the EU, also point the GBP higher.

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EURUSD – Upside bias

A modest setback from Thursday last week, but whilst holding above 1.1794 we see upside pressures from the midweek push above resistances at 1.1832 and 1.1862, keeping the threat for renewed gains Monday.

October activity has served to reinforce the intermediate-term, broader range environment.

For Today:

  • We see an upside bias for 1.1880; break here aims for 1.1936, maybe towards 1.2005.
  • But below 1.1794 opens risk down to 1.1738; through here would see a challenge to the key level at 1.1661.

Intermediate-term Range Parameters: We see the range defined by 1.1661 and 1.2089.

Range Breakout Challenge

  • Upside: Above 1.2089 aims higher for 1.2173, maybe closer to 1.2600/02.
  • Downside: Below 1.1661 sees risk lower for 1.1479 and 1.1311.

4 Hour EURUSD Chart

EURUSD Chart

GBPUSD – Positive tone

A further recovery Friday as expected through resistance at 1.3291/92 after Thursday’s significant setback, but equally strong rebound, sustaining the bias to the upside Monday

The early October push through 1.3147 neutralised the intermediate term bullish theme, BUT we still see October risk for a challenge to 1.2903, which would see an intermediate-term bear shift.

For Today:

  • We see an upside bias for 1.3338; break here aims for 1.3366, maybe 1.3402.
  • But below 1.3205 opens risk down to 1.3120.

Intermediate-term Range Parameters: We see the range defined by 1.2903 and 1.3658.

Range Breakout Challenge

  • Upside: Above 1.3658 aims higher for 1.3841 and 1.4000.
  • Downside: Below 1.2903 sees risk lower for 1.2773 and 1.2587.

4 Hour GBPUSD Chart

GBPUSD Chart