EUR/USD and GBP/USD Price Forecast: Pound Dips to 1.2700 Amid Economic Signals

Highlights

• German Industrial Production drop signals potential economic slowdown, pressuring the Euro.
• French Industrial Production beats expectations, giving a slight boost to EUR/USD.
• US Dollar strengthens on favorable trade balance figures and Fed’s cautious monetary stance.

Economic Releases Sway EUR and GBP Amid Policy Signals

On the Tuesday, the EUR/USD pair closed slightly up at 1.0934, a modest increase of 0.06%. Conversely, the GBP/USD pair experienced a minor downturn, closing at 1.27002, down by 0.07%. These movements were influenced by several key economic releases and announcements.

For the EUR/USD pair,  the German Industrial Production unexpectedly fell by 0.7%, underperforming the market expectations and potentially signaling weaker economic activity in the Eurozone’s largest economy. This was coupled with a wider French trade deficit than anticipated, putting additional pressure on the Euro.

Earlier today, French Industrial Production outperformed expectations, coming in at 0.5% versus the anticipated -0.3%, positively impacting the EUR/USD pair.

On the other side, the US Dollar was positively impacted by its trade balance figures which came out at -63.2B vs. -64.9B forecast. Comments from FOMC Member Barr, hinting at the Federal Reserve’s future monetary policy.

Barr’s remarks on the temporary nature of the emergency loan program and the potential for increased capital requirements for banks indicate a cautious and measured approach by the Fed, influencing the dollar’s strength.

Events Ahead

Going forward, the Italian Retail Sales might affect the Euro if they diverge from the expected 0.2% growth. Similarly, the German 10-year Bond Auction results could impact investor confidence in the Eurozone’s economy.

For GBP/USD, BOE Governor Bailey’s speech is crucial as his comments often hint at future UK monetary policy, directly affecting the pound’s strength.

In the U.S., Final Wholesale Inventories and the 10-year Bond Auction results, along with FOMC Member Williams’ speech, could sway the dollar, thereby influencing both currency pairs. The investor focus will be on any indications of economic health and potential policy shifts.

EUR/USD Technical Forecast

On January 10, the EUR/USD pair is exhibiting modest fluctuations, currently trading at 1.09251. The pair faces immediate resistance at 1.10160, with further resistance levels at 1.10805 and 1.11321.

Support, on the other hand, is found at 1.08983, followed by 1.08282 and 1.07550. The Relative Strength Index (RSI) stands at 41, indicating a bearish sentiment as it is below the 50 threshold. Additionally, the 50-Day Exponential Moving Average (EMA) is at 1.09587, slightly above the current price, reinforcing a short-term bearish trend.

The pair is currently navigating between a triple top resistance at $1.0969 and an upward trendline support around $1.08980. A breakout from this range is likely to set the tone for the pair’s next move, with a bearish inclination below the pivot point of $1.09627.

GBP/USD Technical Forecast

On January 10, the GBP/USD pair is slightly down, trading at 1.26922 with a 0.13% decline. In simple terms, it’s not making any big moves just yet. The pair’s immediate resistance is at 1.27696, with additional hurdles at 1.28272 and 1.28767.

These are the levels the pair needs to break through to climb higher. On the flip side, the pair finds support at 1.26517, followed by 1.26085 and 1.25051, which are like safety nets preventing further falls.

A key thing to note is the symmetrical triangle pattern on the chart. This pattern indicates that investors are unsure which way to go, leading to a consolidation in the pair’s movement. If the pair closes below 1.27264, it’s likely to encourage selling, tilting the bias to the downside.