GBPUSD

If the broader USD can push through range resistance then this rate will likely challenge important support around 1.2090, with little support below there till 1.2000-1.1975 and then 1.1875-1.1865. While over this support we expect more of a range at this stage, albeit volatile and wide, with resistance in this regard at 1.2375 and then 1.2600.

Longer term, the drop to 1.1491 suggests that the decline from the ~1.72 highs set back in 2014 is ongoing and still risks another move lower before a more significant base develops. Medium term, we are expecting a wide range to develop first.

EURUSD

EUR continues to trade with a downward bias, but we are now reaching important support in the 1.0950-1.0900 region. Divergence in the momentum studies warns that the downside is potentially limited for now and we risk another corrective rebound back towards 1.1075, with a move through there and then 1.1120 suggesting we are actually still in the 1.0900-1.1365 range. A break of 1.0900 sees little in the way of support till 1.0760-50.

Longer term, we are becoming wary that the 1.0450-1.17 range is developing as a “flag” consolidation ahead of a test of key long-term support in the 1.00-0.99 region. We are monitoring this for greater clarity and confidence in this view. For now, further range trading is likely to persist.

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