Key Highlights
- GBP/USD declined more than 500 pips in the past few days.
- A major bearish trend line is forming with resistance near 1.2430 on the 4-hours chart.
- EUR/USD is still trading above the main 1.1000 support and pivot area.
- The UK Claimant Count could change 21.4K in Feb 2020, less than the last 5.5K.
GBP/USD Technical Analysis
This month, The British Pound formed a crucial top near the 1.3200 area against the US Dollar. As a result, GBP/USD declined more than 800 pips and broke many supports in the past few days.
Looking at the 4-hours chart, the pair settled below the 1.2800 support, the 1.2500 pivot area, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
The recent decline was such that the pair even broke the 1.2320 support level. It traded close to the 1.2200 support area and it is currently consolidating losses.
On the upside, an initial resistance is near the 1.2320 and 1.2360 levels. The main resistance is now near the 1.2400 and 1.2450 levels. Besides, there is a major bearish trend line forming with resistance near 1.2430.
Therefore, a successful daily close above the 1.2450 level is needed for a fresh increase. If not, the pair remains at a risk of more losses in the near term. The main supports are near 1.2180 and 1.2150.
Fundamentally, the NY Empire State Manufacturing Index for March 2020 was released by the Federal Reserve Bank of New York. The market was looking for a decline from 12.9 to 4.0.
The actual result was disappointing, as the NY Empire State Manufacturing Index declined from 12.9 to -21.5, which is a thirty four point fall.
The report stated:
The new orders index dropped to -9.3, pointing to a decline in orders, and the shipments index fell to -1.7. Delivery times lengthened slightly, and inventories increased.
Overall, GBP/USD might correct higher, but it is trading in a strong downtrend below 1.2450. Similarly, EUR/USD could decline heavily if there is a clear break the 1.1000 support area.
Upcoming Economic Releases
- UK Claimant Count Change Feb 2020 – Forecast 21.4K, versus 5.5K previous.
- UK ILO Unemployment Rate Jan 2020 (3M) – Forecast 3.8%, versus 3.8% previous.
- US Retail Sales Feb 2020 (MoM) – Forecast +0.2%, versus +0.3% previous.
