The British Pound experienced a fresh decline as it encountered selling pressure near 1.2775 against the US Dollar. Currently, GBP/USD is holding the support levels at 1.2620 and 1.2600, potentially signaling the start of a fresh increase. The 4-hour chart reveals some positive signs from the 1.2640 support, as the bulls attempt to push the pair above the 1.2665 level. However, several hurdles are present near the 1.2700 level. Moreover, a key declining channel is forming, with resistance near 1.2700. This channel is in close proximity to the 100 and 200 simple moving averages (SMAs) on the 4-hour chart. In order for GBP/USD to gain further upside momentum, it must close above the 1.2740 zone, which could then open the doors for more upsides towards 1.2780 and potentially 1.2850. On the downside, if GBP/USD fails to hold above the 1.2600 level, it could experience a break below 1.2565 and further decline towards the next major support at 1.2520. In the event of additional losses, the pair may even drop towards the 1.2440 support.
Risk of More Downsides for EUR/USD
EUR/USD extended its losses towards the 1.0800 support zone, heightening the risk of more downsides. The upcoming Fed interest rate decision, with a forecast of 5.5% compared to the previous rate of 5.5%, could potentially impact the pair’s movement. Currently, the pair is displaying bearish tendencies below the 1.0800 support zone. In order for EUR/USD to reverse its downward trajectory, it needs to break above this zone and gain bullish momentum. Otherwise, the pair may continue to face further downside pressure.
Economic Releases
- US ADP Employment Change for Jan 2023 – Forecast 145K, versus 164K previous
- Fed Interest Rate Decision – Forecast 5.5%, versus 5.5% previous
GBP/USD is currently experiencing a fresh decline, but there are indications of a potential upward movement. Nevertheless, it faces hurdles and a key declining channel near the 1.2700 level. Conversely, EUR/USD is at risk of more downsides as it extends losses towards the 1.0800 support zone. The upcoming Fed interest rate decision could greatly influence the movement of both currency pairs. Traders and investors should closely monitor these levels and economic releases to determine their trading strategies.
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