- Comments on Tuesday by Mario Draghi, the ECB President were taken by the market as more” hawkish” than previous statements. “Hawkish” means taking a tougher line on potential inflationary pressures, indicating potential for higher interest rates in the future and the removal of quantitative easing.
- The buzzword of the week was “normalisation”, with Mark Carney, Governor of the Bank of England, in a speech on Wednesday also indicating a more “hawkish” view. Again, this has indicated potential for interest rates to rise in the UK, potentially in 2017.
- The anticipation of global central banks joining the interest rate hiking cycle alongside the Federal Reserve, has meant that most G10 currencies have seen increases against the US$.
- This has meant significant moves higher for both EURUSD and GBPUSD.
- In particular, EURUSD has moved above 1.1300, which was the spike high on the US Presidential Election on 9 November 2016. This opens the door to further EURUSD gains into July and potentially beyond.
- Equally, GBPUSD has pushed up close to the May peak at 1.3048, with threat for a more positive move still higher on a break though this level.
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EURUSD – Bullish trend re-energised
A dip and a bounce Friday to reinforce the Thursday push above a notable 1.1428 resistance, sustaining the rally from Tuesday’s aggressive push up through the November spike high (from the US Presidential Election) at 1.1300, keeping the risk higher again Monday.
Furthermore, this price action reinforces the intermediate-term bullish outlook into July.
For Today:
l We see an upside bias for 1.1447; break here aims at 1.1500, maybe up to 1.1555.
l But below 1.1392 targets 1.1347, maybe 1.1291.
Intermediate-term Outlook – Upside Risks:
l Whilst above 1.1107, we see a positive tone with the bullish threat to 1.1366.
l Above here targets 1.1428/47, 1.1616 and 1.1714.
What Changes This? Below 1.1107 signals a neutral tone, only shifting negative below 1.0837.
Daily EURUSD Chart
GBPUSD – Bull trend intact
Again, a still bullish tone Friday, sustaining the latter June rebound through the 1.3015 peak and keeping the threat higher Monday.
For Today:
l We see an upside bias for the cycle high at 1.3048, maybe 1.3085 and key target at 1.3121.
l But below 1.2945/28 opens risk down to 1.2860.
Intermediate-term Outlook – Upside Risks:
l We see a positive tone with the bullish threat to 1.3121.
l Above here targets the 1.3455/3534 area.
What Changes This? Below 1.2513 signals a neutral tone, only shifting negative below 1.2363.
4 Hour GBPUSD Chart
