EURUSD and GBPUSD: Seven-day Pullback

• Yesterday, the euro made a big pullback below 1.01000.
• The pound continues its seven-day pullback from the 1.22500 level.
• UK retail sales unexpectedly rebounded by 0.3% month-on-month, in contrast to a 0.2% fall in June.

EURUSD chart analysis

Yesterday, the euro made a big pullback below 1.01000. During the Asian trading session, the pair dropped to 1.0070 and is now moving in that range to 1.01000 levels. We need a positive consolidation and a euro return above the 1.01000 level for a bullish option. If we succeeded, the pair would gain support in the MA20 moving average. That could further push the euro to continue its recovery. Potential higher targets are 1.01500 and 1.02000 levels. For the bearish option, we need a continuation of the negative consolidation. After that, we can expect the continuation of the withdrawal of the euro towards lower support levels. Potential lower targets are 1.00500 and 1.01000 levels.

GBPUSD chart analysis

The pound continues its seven-day pullback from the 1.22500 level. During the Asian trading session, the pair tried to hold on to the 1.19000 level, but without success, because a break below followed. Currently, the GBPUSD pair is at the 1.18715 level, and we could expect a further continuation of the pound’s decline. Potential lower targets are 1.18500 and 1.18000 stronger support zone. For a bullish option, we need a new positive consolidation and a return above the 1.19000 level. Then we need to hold on to that place in order to try to continue the recovery. Potential higher targets are the 1.19500 and 1.20000 levels, and additional resistance at that level can represent the MA50 moving average.

Market overview

UK retail sales unexpectedly rebounded by 0.3% month-on-month, in contrast to a 0.2% fall in June. On an annual basis, retail sales fell 3.4% in July, following a 6.1% decline in June. “The sense of ineptitude surrounding the UK economy is the biggest driver of these negative findings,” said Joe Staton, director of the client strategy at GfK. “These current results indicate a sense of capitulation, i.e., powerlessness, to financial events far beyond ordinary people’s control.