EUR/USD and GBP/USD Price Forecast: Euro Slips to 1.09135, Awaits ZEW Sentiment Shift

Highlights

• Euro and Pound face pressure; Dollar Index shows bullish signs.
• ZEW Economic Sentiment to set tone for EUR; BOE Governor Bailey’s speech eyed for GBP cues.
• Waller’s FOMC speech anticipated to sway USD dynamics significantly.

Mixed Data Weighs on Euro and Pound as Dollar Strengthens

On Monday, the EUR/USD pair closed almost unchanged at 1.09503, reflecting a marginal 0.01% decline, amidst a backdrop of mixed European economic data. German Wholesale Price Index (WPI) unexpectedly dropped, while Italian trade balance showed a narrower surplus than expected, and Eurozone industrial production contracted.

Meanwhile, GBP/USD experienced a decline of 0.17%, closing at 1.27261. Today’s most of the movement in GBP is influenced by UK labor market data, including a lower than anticipated Claimant Count Change and a slight dip in the Average Earnings Index. Concurrently, the US Dollar Index displayed bullish behavior, closing at 102.192 with a rise of 0.43%, impacting both EUR/USD and GBP/USD dynamics.

Events Ahead

Looking ahead, the EUR will be influenced by the German ZEW Economic Sentiment and broader Eurozone ZEW Economic Sentiment data, which are pivotal in gauging investor confidence.  Concurrently, in the UK, remarks from Bank of England Governor Bailey are keenly awaited for insights into the UK’s monetary policy.

Across the Atlantic, FOMC Member Waller’s speech will also be closely monitored for any indications of the Federal Reserve’s stance on monetary policy, which could significantly impact the US Dollar and, consequently, the EUR/USD and GBP/USD currency pairs.

US Dollar Index (DXY)

The U.S. Dollar Index (DXY) is exhibiting a bullish breakout from a consolidating pattern, trading above a crucial upward trendline on the 4-hour chart. Currently, it is positioned just below the 102.737 resistance, with the 50-day Exponential Moving Average (EMA) at 102.014 providing immediate support. A sustained move above current levels could signal further strength, targeting higher resistance zones.

EUR/USD Technical Forecast

On January 16th, the EUR/USD pair registered a downward movement, decreasing by 0.34% to a level of 1.09135. In the 4-hour chart, the pivot point stands at 1.09421, suggesting a pivotal moment for the currency pair.

The EUR/USD encounters resistance at 1.10003, with further barriers at 1.10750 and 1.11367. On the support side, the levels are 1.08983, 1.08282, and 1.07550. Technical indicators reflect a bearish sentiment for the EUR/USD.

The 50-Day Exponential Moving Average (EMA) is currently at 1.0954, while the 200-Day EMA is at 1.0921, both hovering above the current price, indicating potential downward pressure.

A significant chart pattern observed is the break below the upward trendline at 1.0940, accompanied by the formation of three black crows, a strong indication of a selling trend. Given these technical factors, the overall trend for the EUR/USD is bearish below the 1.0940 level.

GBP/USD Technical Forecast

On January 16th, the GBP/USD pair faced a downward trajectory, registering a 0.51% decline to 1.26629. Analyzing the 4-hour chart, a pivot point is observed at 1.26877. The pair is encountering immediate resistance at 1.27222, with further resistance levels at 1.27829 and 1.28272. On the support side, levels are marked at 1.26491, 1.26079, and 1.25707.

The 50-day Exponential Moving Average (EMA) is positioned at 1.27214, while the 200-day EMA stands at 1.26512, highlighting key technical thresholds. Currently, a symmetrical triangle pattern is observed, indicating that GBP/USD is trading sideways in a narrow range between 1.2780 and 1.2650 levels.

Considering these technical indicators, the overall trend for GBP/USD leans towards bearish below the 1.26877 mark.