EURUSD to GBPUSD in search of support

Pair EURUSD yesterday failed to make a new low this year but formed a new higher low on the chart at 1.12250. It gave us instant consolation that we may see a resumption of recovery from a previous fall. We now expect a bullish consolidation that should form a new higher high and confirm the change in trend.

Bullish scenario:

• We need to continue this short positive consolidation and break above 1.13500 to say that the recovery has begun.
• We then test the previous high at 1.13800 to reach the zone at 1.14000.
• If EURSUD succeeds, we will continue towards 1.14500 of the previous bearish consolidation.

Bearish scenario:

• We need new negative consolidation, retreating below moving averages and testing the 1,125,500 support zone.
• A further decline in EURUSD will bring us down to the previous low of support in the zone of 1.12000, and maybe even firm a new lower low if we see the continuation of the bearish trend.

GBPUSD chart analysis

Pair GBPUSD formed a new low this year at 1.31612 today but quickly retreated to 1.32000, now seeking that support. It is evident that the pound is very weak and fails to match the dollar, which is in the bullish trend this year. Looking at the chart, we see that the pressure has increased since November 18, where the constant decline of GBPUSD begins.

Bullish scenario:

• We need a new positive consolidation above 1,325,500 with the support of the MA20 moving average.
• Then in zone 1.33000, we come across the MA50 moving average and expect its support to continue on the bullish side.
• The next higher resistance awaits us in zone 1.33500, the place of the previous consolidation before this fall.
• Our next resistance is at 1.34000 before we go up to test the previous high at 1.35000.
• Additional resistance at that level can be our MA200 moving average.

Bearish scenario:

• We need to continue this negative consolidation and the fall of GBPUSD below 1.32000.
• Then we can expect new testing of the previous lower low at 1.31612.
• Depending on the strength of the bearish pressure, there is a possibility of forming a new minimum this year.

Market overview

German industrial production recovered faster than expected in October, boosted by car production, according to data released by Destatis on Tuesday.

Industrial production rose 2.8 percent on a monthly basis in October, reversing a 0.5 percent drop in September. The forecast is that production will grow by 0.8 percent.

Compared to February 2020, a month before the introduction of restrictions due to the crown pandemic in Germany, production in October was 6.5 percent lower.

The economy ministry said the outlook for the industrial economy remained cautious. Damage to supply bottlenecks is likely to continue for several months.

In October, the recovery in car production means that total industrial production could increase in the fourth quarter, said Andrew Kenningham, an economist at Capital Economics.

According to estimates released by Eurostat on Tuesday, the eurozone economy has grown mainly thanks to household consumption.

The gross domestic product grew steadily at 2.2 percent in the third quarter. The estimate for the second quarter was revised by 2.1 percent, and Eurostat confirmed the rate for the third quarter.

On an annual basis, GDP grew by 3.9 percent instead of the previously estimated expansion of 3.7 percent. However, this was slower than the 14.4 percent increase in the second quarter.

With the rise in cases of Covid, a government tightening restrictions, and supply-limiting supply-limiting supplies, the economy appears ready for a very weak fourth quarter, said Jack Allen-Reynolds, an economist at Capital Economics.