After spiking down and reversing from 1.0850 earlier this week, intra-day trend resistance at 1.0945 capped the bounce yesterday. A move up through this resistance would suggest a move into the 1.10-1.1070 region, where we would still expect a lower high to develop. Otherwise, the current tight range should give-way to renewed weakness towards our lower targets in the 1.0750 region, with 1.06 triangle support below there.
Long-term, we are 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/confidence, but for now ranges persist.
We remain in a tight range over important support at 0.8880 and under 0.8980. A move through this interim high would see a push up to test more important resistance in the 0.9070-0.9150 region. We would still expect this upper region to cap as part of a broader range. A decline through 0.8880 would see daily trend support in the 0.8795-0.8745 region tested. We would expect that region to hold for now.
Longer term, aligned with GBPUSD, we are wary that another move to test the 0.9802 highs set back in 2008 can’t be ruled out and we are monitoring medium-term price action to confirm whether this will be the case, or whether 0.97 was a lower high within a broad range.
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