17 Sep, 2023
5 minutes
EURUSD GBPUSD Market Insight
EUR/USD
The interest rate increase of European Central Bank will not only fail to address high inflation pressure, but the overall economic downturn and the differences among member countries will definitely lag behind the effectiveness of monetary policy. At the same time, the number of restrictions on the euro has further increased. The latest data shows that the use of the euro in international settlements fell to the lowest level on record. Even if the ECB takes measures to raise interest rates, the rate level is still one of the lowest in developed countries.
We can see EUR/USD tried to make a upward breakthrough, but it is hard to change downtrend shortly. On the other hand, MACD negative histogram bar and double line seems to constitute bottom divergence on H4 chart. The euro does not rise but depreciates very passively since the Russia and Ukraine conflict reduces the status of the euro and the euro system may face collapse. Hence the sell limit near 1.0700 could be built for short positions.
GBP/USD
The interest rate increase of ECB was beyond the expectation of investors, but they are still reluctant to completely discount the likelihood of rate increases from the Bank of England. The probability of the BOE raising interest rates on September 21 is 70%. The survey showed that expectations for inflation in the next year were lowered to 3.6%, which means that inflation is not expected to move closer to the target soon. However, economic momentum is weakening, with GDP shrinking more than expected in July.
We can see the Pound still dropped along with moving average systems, the position of 1.2500 is becoming strong resistance on H4 chart. In addition, the MACD histogram bar and double line has formed bottom divergence, which means potential rebound is coming. As a result, the sell limit between 1.2450 to 1.2500 could be set and stop loss is necessary.