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How High Can EUR/USD And GBP/USD Go?

By MaiMarFX (Marios Krausse)ForexMay 10, 2021 04:51AM ET
www.investing.com/analysis/how-high-can-eurusd-and-gbpusd-go-200578855
How High Can EUR/USD And GBP/USD Go?
By MaiMarFX (Marios Krausse)   |  May 10, 2021 04:51AM ET
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The U.S. dollar held losses after Friday’s NFP report missed the market’s high expectations. U.S. jobs rose by only 266K in April, while 1 million was projected. What we saw on Friday was a short squeeze as traders gave up on dollar long positions while the weak job number suggested the Federal Reserve will stick to its accommodative monetary policy stance for the time being.

GBP/USD

The best performer on Friday was the British pound which broke above the crucial 1.40-resistance on the back of a weakening U.S. dollar on the one side, and last week’s Bank of England taper on the other side.

From a fundamental perspective, the economic outlook in the U.K. continues to be positive with the country ending its lockdown and vaccinating over half of its population.

As for the Scottish independence referendum, Nicola Sturgeon’s National Party fell one seat short of an outright majority after last week’s election, providing some relief for sterling investors.

While an independence referendum is not off the table, there seems to be no immediate political risk for the pound right now.

Technically, the short-term forecast is bullish—provided that the cable holds above 1.39. We see a next higher target around 1.4150, but for bullish momentum to continue, we need to see the pound stabilizing above 1.40. If the pair breaks below 1.3920, chances could shift in favor of the bears. Today we are long at 1.4065.

GBP/USD Chart
GBP/USD Chart
 

EUR/USD

The euro stabilized above 1.2130 and could now be on its way towards 1.2250. As long as the pair remains above 1.2040, we favor the uptrend.

Euro Daily Chart
Euro Daily Chart

DAX

The index trended upwards while the 15500-mark came back into focus. We will now wait for the DAX to break above the April high at 15518 in order to shift the focus to higher targets beyond 16000. A current support is seen at 15300. Today we went short at 15410 and reached our profit target at 15370.

DAX Daily Chart
DAX Daily Chart

On Wednesday, the U.S. CPI report will be of particular interest with inflation forecast to show an increase in April, putting pressure on the Fed to think about tapering sooner rather than later.

On the same day Bank of England Governor Andrew Bailey is scheduled to give his remarks on monetary policy which could have an impact on the pound.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

How High Can EUR/USD And GBP/USD Go?
 

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How High Can EUR/USD And GBP/USD Go?

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Comments (1)
Thabang Sefako
Thabang Sefako May 11, 2021 2:48AM ET
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From the 7th May Euro Bullished from 1.2075 with a straight trend to 1.2125 without distraction.Since then Euro kept gaining power against Usd keeping the prize not lower than 1.2125 puting much pressure on Usd with the prize reaching higher as 2.2175, but I don't think the prize can go higher than there and I think that Since well Usd is being weak against Euro that much,the smaller chance Usd will get it will punished Euro with a strong Bearish.Im holding on Sell since Friday at 1.2145 with target at 1.2100,Not afraid of further Bullish.
Marios Krausse
Marios Krausse May 11, 2021 2:48AM ET
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Now that EUR/USD broke below 1.2120 we may see further bearish momentum pulling the pair towards 1.2050. It will also hinge on Today's CPI data. As long as the euro remains below 1.2185 you might be doing well with your sell position.
 
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