European currencies seem to have successfully breezed through the latest event risks, but there are still a number of major catalysts lined up in the next few days.
EUR/JPY made another strong bounce last week and is now setting its sights on the descending channel resistance on the 4-hour chart.
If the ceiling around the 124.50 minor psychological mark holds, the pair could make its way back down to support around the 122.00 handle or at least until the mid-channel area of interest at 123.00 major psychological support.
Stochastic is already indicating overbought conditions, which means that euro bulls are feeling tired and could let bears take over.
- WO: 124.31
- Top WATR: 125.42
- Bottom WATR: 123.21
- PWH: 124.52
- PWL: 122.37
Guppy tested the descending channel resistance I was eyeing last week and bulls pushed the pair higher to signal a potential reversal.Brexit negotiations are set to begin this week, so the talks could provide a good clue of how the future of the U.K. economy could look. There have been speculations of a “hard Brexit” or perhaps a situation where the parties walk out without any deal at all, both of which could be bearish for the pound.
However, pound buyers are still cheering the latest BOE decision wherein three members voted to hike interest rates. This follows stronger than expected inflation releases and a weak consumer spending report, indicating that the central bank might need to act in order to help Brits keep up with rising price levels.
- WO: 141.58
- Top WATR: 143.09
- Bottom WATR: 140.08
- PWH: 142.21
- PWL: 138.60
EUR/GBP is sitting pretty at an area of interest on the rising channel support and 61.8% Fibonacci retracement level.
Stochastic is moving up to suggest that buyers are regaining control of price action and could allow the climb to carry on. If so, price could head back up to the swing high or until the very top of the channel.
On the other hand, a break below support or the .8700 handle could be enough to confirm that a reversal from the uptrend is taking place.
- WO: .8780
- Top WATR: .8851
- Bottom WATR: .8710
- PWH: .8854
- PWL: .8726
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