Both EUR/USD and GBP/USD dropped to low levels and face significant challenges. What’s next for these pairs? The team at SocGen analyzes the technical levels:
Here is their view, courtesy of eFXnews:
After consolidating within a broad range since March 2015, EUR/USD is now breaching below the lower bound (1.0465) pointing towards the possibility of further down move. On the daily chart, the pair has moved below a multi-month descending channel (at 1.0465/1.0510). Daily RSI is at a higher level as compared to November trough. However, signs of rebound are still awaited.
The descending channel at 1.0465/1.0510 will be an immediate hurdle while 1.0665 should cap near-term upside. Very short term, the pair is likely to drift towards next projections at 1.03. In the event of a break below 1.03, EUR/USD will face an extended correction towards multiyear down sloping channel limit at 1.0180 and more importantly 1.00.
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GBP/USD has undergone a relentless down move after breaching key graphical levels, and significant stabilization is awaited. Recent lows of 1.1752/1.1660 may provide a cushion for the time being. Short term, it faced resistance near 1.28/1.2870 and is undergoing a retracement.
Break of 1.2330 will signal deeper correction towards 1.2140/1.21.
*SocGen maintains a short GBP/USD position in its portfolio from 1.2590.
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