Pound and Euro Test Key Support Levels: Is a Breakout Possible?

FXOpen

European currencies are showing surprising resilience. Despite the general strengthening of the dollar and strong macroeconomic data from the US, EUR/USD and GBP/USD continue to trade above strategically important levels:

  • EUR/USD has been testing 1.0660 for over three weeks but cannot establish itself below this level.
  • GBP/USD buyers have been holding off sellers for a second week at the 1.2610-1.2600 level.

EUR/USD

The recent parliamentary elections in France, with the first round concluding last Sunday, have contributed to a slight strengthening of the euro. The pair opened with a small price gap and managed to strengthen by over 60 pips within a few hours. Experts attribute the rise in the single European currency to the possibility that Le Pen's far-right party might outpace President Emmanuel Macron's centrist alliance and the left-wing "New People's Front" with fewer votes than needed for an absolute majority after the second and final round of voting.

Technical analysis of the EUR/USD pair indicates continued range-bound trading between 1.0760-1.0660. A breakout and consolidation above 1.0760 could lead to a renewed rise towards 1.0900-1.0850. Breaking the three-week support at 1.0660 could result in a retest of the April low this year at 1.0590.

Events that could impact the pair's pricing include:

  • Today at 12:00 (GMT+3): Eurozone core Consumer Price Index (CPI) for June
  • Today at 13:30 (GMT+3): Speech by European Central Bank (ECB) representative Elizabeth Schnabel
  • Today at 16:30 (GMT+3): Speech by US Federal Reserve Chairman Jerome Powell

Read analytical EUR/USD price forecasts for 2024 and beyond.

GBP/USD

For the second week, the GBP/USD currency pair is trading within a relatively narrow 100-pip range, which is unusual for it. Yesterday, the price surged sharply to 1.2700 but just as sharply fell, closing the day with a candle featuring a long upper shadow, which may indicate weakness among pound buyers. According to technical analysis of the GBP/USD pair, a break below 1.2600 could renew the downward trend towards 1.2560-1.2450. The bearish scenario could be nullified if the price confidently consolidates above 1.2700.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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