Will EUR/USD And GBP/USD To Remain In A Downtrend?
MaiMarFX | Nov 22, 2021 04:34AM ET
It’s the Thanksgiving holiday week and while this means a seasonal liquidity drain across the markets, it does not mean that there will be no trend. Rising COVID-19 cases and monetary policy remain driving themes and the market awaits President Biden’s decision on the next leader of the Federal Reserve.
The decision seems to be between Jerome Powell and Lael Brainard. The latter is notably more dovish than Powell and could therefore generate a bearish reaction in the US dollar. Markets largely expect incumbent Powell to keep his role and are already pricing in a Fed rate hike as soon as July. Biden’s decision on who will be the next Fed chair is expected before the Thanksgiving holiday on Thursday.
h2 EUR/USD – Vulnerable to a Dip Toward 1.1150?/h2The EUR/USD gives in to the warning of new economic shutdowns related to the resurgence in covid cases in Europe. We saw the pair found some short-term support at 1.1250 but the euro remains vulnerable to further losses with Germany leaving the door open to lockdowns heading into the holiday season.
From a technical perspective, we will focus on a break below 1.1240 in order to shift the focus to a lower target at 1.1150. On the upside, we see a short-term resistance area between 1.13 and 1.1330 which could attract sellers.
While GBP/USD bulls were able to stabilize the pair above 1.34, the sentiment could now change in favor of the bears – provided that 1.34 breaks again. Below 1.3390 we will shift our focus to a lower target at 1.33.
Nevertheless, traders should bear in mind that the British pound could benefit from a buy-the-dip strategy ahead of the Bank of England (BoE) rate decision in December with an increased probability of a BoE rate hike. This is at least what investors price in.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumptions of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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