GBP/USD looks set on its way lower following the Bank of England decision. Meanwhile, EUR/USD hits trendline support and NZD/USD approaches a cluster of resistance which could send the pair lower once more.EUR/USD rallying from trendline support
EUR/USD has been weakening sharply throughout the middle of the week, yet we are seeing tentative signs that this pair is going to turn higher once more. Crucially we have seen the pair bounce from an inside trendline support, with price action heading higher ever since.
The key here is whether we see an hourly close above $1.1148. Should that occur, we would have reason to believe a period of strength would follow. However, the inability to break through that resistance level would point towards a challenge of trendline support once more.
GBP/USD looks set to head lower
Yesterday saw GBP/USD fall heavily following the BoE’s outperformance. Overnight consolidation seems to be on the turn, with the stochastic crossing over and price seemingly reversing.
There is no surefire way to know whether this retracement is over, yet given the 2:1 risk reward for a move back towards yesterday’s lows rather than breaking higher once more seems more attractive than being long here. As such, a bearish view is in place given the break through $1.3162, with any rally looking like a retracement that will be sold into.
This resumption of the bearish trend also conforms to the longer term view.
NZD/USD to turn lower once more
NZD/USD appears likely to turn lower despite current strength, with a wider trendline break and rally into the 76.4% now seeing something very similar in the shorter-term. Given the cluster of both the longer- and shorter term 76.4% pullbacks around $0.7229-$0.7236, a short position around this area is of particular interest.
This plays on the idea of yet another failure to create a new high following the break below $0.7162 earlier in the week. This would likely coincide with the stochastic coming into trendline resistance. This bearish view would be negated with an hourly close above $0.7256.
