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GBP/USD Nosedives, Upsides Could Be Capped

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Aayush Jindal

Key Highlights

  • GBP/USD started a fresh decline below the 1.3600 support.
  • A key bearish trend line is forming with resistance near 1.3520 on the 4-hours chart.
  • EUR/USD declined below the 1.1320 support, with risk of more downsides.
  • USD/JPY is struggling to recover above the 114.20 and 114.30 levels.

GBP/USD Technical Analysis

The British Pound started a fresh decline from the 1.3750 zone against the US Dollar. GBP/USD traded below many important supports near 1.3620 to enter a bearish zone.

Looking at the 4-hours chart, the pair settled below the 1.3600 level and the 100 simple moving average (red, 4-hours). The pair even traded below the 1.3500 support and the 200 simple moving average (green, 4-hours).

It traded as low as 1.3444 and currently consolidating losses. On the upside, the pair is facing resistance near 1.3490 and 1.3500 levels.

Besides, there is a key bearish trend line forming with resistance near 1.3520 on the same chart. The next major resistance is near the 1.3550 level. It is near the 50% Fib retracement level of the downward move from the 1.3661 swing high to 1.3444 low.

If there is a fresh increase above 1.3550, the pair could rise above 1.3600. If not, there is a risk of more downsides below the 1.3440 level. The next major support sits near the 1.3320 level.

Looking at EUR/USD, the pair traded below the 1.1320 support and seems like there is a risk of more downsides below 1.1300 in the near term.

Economic Releases

  • German IFO Business Climate Index for Jan 2022 – Forecast 94.7, versus 94.7 previous.
  • US House Price Index for Nov 2021 (MoM) - Forecast +1%, versus +1.1% previous.
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