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

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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.