The EUR/USD and GBP/USD currency pairs are central to Forex market dynamics, influenced by a mix of technical factors and global geopolitical shifts. Traders are keenly observing key support and resistance levels, along with critical economic indicators, to make informed decisions in the ever-changing foreign exchange market.
EUR/USD: Uptick and Challenges
EUR/USD has found stability above 1.0950 after a significant drop on Tuesday. This decline was driven by a strengthening US Dollar, contrasting with the Dollar Index’s 2% decrease in December. As of early Wednesday, the pair is around 1.0950, having reached a near two-week low at 1.0938.
Upcoming Catalysts
The US economic calendar today is crucial for this pair. The ISM Manufacturing PMI for December and the November JOLTS Job Openings report are of particular interest. An increase in the PMI could strengthen the USD, while a marked decline in job openings might weaken it.
Federal Reserve’s Influence
The Federal Reserve is due to release the minutes of its December policy meeting later today. Confirmation of discussions about a policy shift could challenge the USD’s current strength. Market expectations currently include a 25% chance that the Fed will maintain the current policy rate in March.
EUR/USD Technical Analysis
The 4-hour chart for EUR/USD shows a bearish bias, with the Relative Strength Index just above 30. The key support at 1.0950, bolstered by the 100-period SMA, could be tested. Potential supports below this level are at 1.0920, 1.0900, and 1.0850.
GBP/USD: Stability Amidst Global Shifts
GBP/USD recorded a modest gain on January 3, trading at 1.2633. The pair is near a pivot point of 1.26121, with resistance at 1.26990, 1.27651, and 1.28275. Support levels are at 1.25356, 1.24748, and 1.23983.
Technical Analysis
With the Relative Strength Index at 38, suggesting a bearish sentiment, GBP/USD is trading below its 50-day EMA of 1.26962, indicating a short-term bearish trend. However, an upward trendline near the pivot point suggests possible bullish momentum, leading to a cautiously optimistic view.
Global Events and Data Affecting The EUR/USD and GBP/USD Rates
Global developments, like Saudi Arabia’s potential BRICS membership, add volatility to GBP/USD. Upcoming data releases, such as the German Unemployment Change and US ISM Manufacturing PMI, will impact both currency pairs. Both geopolitical events and economic indicators play a significant role in shaping the trajectory of GBP/USD.
