An attempt to recover the Euro and the Pound

EURUSD chart analysis

During the Asian session, the euro strengthened against the dollar, which is in a smaller pull. Yields on US government bonds are retreating, and a better (“risk-on”) mood prevails in the financial market, pushing this currency pair up. On Thursday, it was announced that US GDP grew much more than expected in the fourth quarter of last year (6.9% versus the expected 5.5%). This only determined the belief of market participants about the expected aggressive interest rate policy (raising the interest rate) of the Fed this year. On the other hand, the ECB is in a different position for the eurozone, so the euro was under pressure last week. Currently, the euro is being exchanged for 1.11770 dollars, representing the strengthening of the common European currency by 0.27% since the beginning of trading tonight.

Bullish scenario:

• EURUSD found support in the zone around 1.11200 on Friday, and now we need further continuation of the current positive consolidation.
• We are very close to the first next resistance at 1.12000, and we need a break above that level to move from last week’s low.
• In the zone around 1.13000, we find MA20 and MA50 moving averages, and we hope to get their support for further bearish continuation.
• In the zone around 1.14000, we find the upper trend line, and we need a break above to get bullish optimism and a better mood for the euro.
• The targets above the trend line are first 1.15000, then 1.17000.

Bearish scenario:

• We need a continuation of the negative consolidation and the withdrawal of EURUSD from last week’s low to 1.11200.
• Below this minimum, space opens to 1.10000, the new minimum this year; the last time we were here was in May 2020.

GBPUSD chart analysis

During the Asian session, the British pound strengthened against the dollar. Yields on US government bonds are retreating, and a better mood prevails in the financial market, which is pushing this currency pair up. Concerns about post-Brexit are still in the background. Today, the focus is on the “Brexit Freedoms” law. The Prime Minister of the United Kingdom, Boris Johnson, intends to introduce new regulations that would suppress the application of still valid European law on the island. Now the pound is exchanged for 1.3438 dollars, which is strengthening the British currency by 0.35% since the beginning of trading tonight. A regular meeting of the Bank of England is being held on Thursday, and it is expected that the bank will raise the reference interest rate for the second time (after December).

Bullish scenario:

• After finding support at 1.34000, we now need further positive consolidation that would take us further to the 1.35000 psychological level.
• At the current level, we have additional support in the MA50 moving average, and our target is the MA20 in the zone 1.35750-1.36000.
• If GBPUSD continues with the bullish momentum, our first main target is this year’s high at 1.37500.
• An additional resistance at that level is the MA200 moving average.

Bearish scenario:

• We need to continue last week’s negative consolidation and a new test of the previous low at 1.33600.
• We currently have support in the MA50 moving average, and we need to pull GBPUSD below to boost the new bearish pressure.
• Our next support is in the zone around 1.33000, and then the next one, last year’s minimum, around 1.32000.
• In the continuation of the bearish trend, there is a probability that we will go down to 1,300,000, the lower psychological level on the chart.

Market overview

The eurozone economy raised slower than expected in the fourth quarter, a preliminary estimate by Eurostat showed on Monday.

The gross domestic product raised 0.3 percent in a row, slower than the 2.3 percent expansion seen in the third quarter. The rate is in line with economists’ expectations.

Economic growth accelerated to 4.6 percent from 3.9 percent in the previous quarter year on year. But this was slightly softer than the expected rate of 4.7 percent.