GBP/USD Forecast: holding steady above 1.3000 mark as FOMC decision looms

Haresh Menghani FXStreet

Following Monday's late retreat from higher levels, both the GBP/USD and the EUR/USD pairs traded in a narrow band during Asian session as investors now look forward to the much awaited monetary policy meetings of the US Federal Reserve and the Bank of Japan, which is expected to trigger a fresh bout of volatility in the currency market.

On Monday, the greenback reversed part of Friday's strong gains led by sharper-than-expected rise in US consumer prices on fading expectations of any action from the Fed this week. The US Dollar, however, managed to pare losses as traders continue to readjust their positions ahead of the rate decision. The GBP/USD pair was capped below 1.3100 handle, while the EUR/USD pair faced rejection at 1.1200 round figure mark.

As for today, German PPI will be released during European session on Wednesday and the US economic docket features the release of housing starts and building permits.

Technical outlook

GBP/USD

Following Friday’s sharp sell-off, the pair failed to register any meaningful recovery and move back above 1.3100 handle, indicates further selling pressure is likely to emerge if it breaks below 1.3000 psychological mark. Below 1.3000 handle the pair is likely to accelerate the slide immediately towards a short-term ascending trend-line support, extending from July low through low touched in August, currently near 1.2915 area.

On the flip side, 1.3100 round figure mark now becomes immediate resistance to watch for. On a sustained recovery back above this immediate resistance, the recovery is likely to get extended towards 1.3185-90 strong horizontal resistance. A follow through buying interest above 1.3185-90 resistance would negate any near-term bearish bias and assist the pair to continue scaling higher in the near-term.

EUR/USD

After repeated failed attempts to sustain its move above 1.1250-60 resistance area, the pair on Friday finally broke through 100-day SMA and retested the very important 200-day SMA support. Monday’s recovery faced rejection at 100-day SMA, which now seems to confirm immediate strong resistance around 1.1200 handle. A sustained move back above 100-day SMA resistance, leading to a subsequent strength above 1.1250-60 resistance, might now trigger a fresh leg of up-move that could lift the pair immediately towards 1.1300 handle also coinciding with a short-term descending trend-line resistance.

Meanwhile on the downside, 200-day SMA near 1.1150 region remains immediate support to defend. Failure to hold this important support, and a subsequent drop below late August lows support near 1.1125 area, is likely to accelerate the slide towards and intermediate support near 1.1050 region before the pair eventually breaks below 1.1000 psychological mark and head towards testing post-Brexit low support near 1.0950 level.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.