GBP/USD Struggles Near 1.3900, Recovery Could be Capped
- GBP/USD found support near 1.3740 and recovered above 1.3850.
- It surpassed a key bearish trend line with resistance near 1.3835 on the 4-hours chart.
- EUR/USD must clear 1.1900 to start a decent recovery wave.
- The US CPI could increase 4.9% in June 2021 (YoY), down from the last 5%.
GBP/USD Technical Analysis
The British Pound remained in a bearish zone below the 1.4000 handle against the US Dollar. GBP/USD traded as low as 1.3731 before starting an upside correction.
Looking at the 4-hours chart, the pair was able to correct above the 1.3800 resistance level. There was a break above a key bearish trend line with resistance near 1.3835.
The pair even traded above the 50% Fib retracement level of the main drop from the 1.4008 swing high to 1.3731 low. There was also a spike above the 100 simple moving average (red, 4-hours), but the pair failed to clear the 1.3900 resistance
It also struggled near the 61.8% Fib retracement level of the main drop from the 1.4008 swing high to 1.3731 low. If the pair stays below the 1.3900 resistance, it could resume its decline.
The first key support is near 1.3820, below which the pair could retest the 1.3740 support. Any more losses may possibly lead GBP/USD towards the 1.3650 level.
On the upside, the first key resistance is near the 1.3900 level. The next major resistance is near the 1.3940 level. Any more gains could lead the pair towards the main 1.4000 resistance.
Looking at EUR/USD, the pair must settle above the 1.1900 resistance zone to start a decent recovery. The next major resistance sits at 1.1975.
- German Consumer Price Index for June 2021 (YoY) – Forecast +2.3%, versus +2.3% previous.
- German Consumer Price Index for June 2021 (MoM) – Forecast +0.4%, versus +0.4% previous.
- US Consumer Price Index for June 2021 (MoM) – Forecast +0.5%, versus +0.6% previous.
- US Consumer Price Index for June 2021 (YoY) – Forecast +4.9%, versus +5.0% previous.
- US Consumer Price Index Ex Food & Energy for June 2021 (YoY) – Forecast +4.0%, versus +3.8% previous.