EURUSD and GBPUSD are still in consolidation

EURUSD chart analysis

During the Asian session, the euro strengthened against the dollar. Long-term yields on U.S. government bonds have slowed again. In France, Spain, and Italy, the numbers of newly infected are at an extremely high level. Still, no measures are planned to restrict the movement of people, so the euro is below 1.13 and is rapidly consolidating. The euro is currently being exchanged for 1.13119 dollars, representing the strengthening of the common European currency by 0.22% since the beginning of trading tonight. At 20:00 during the American session, notes from the last meeting of the U.S. Federal Reserve will be published.

Bullish scenario:

We need to continue the positive consolidation up to the resistance trend line.
To expect further progress, we need to break above the MA50 and MA20 moving averages.
Our first target is 1.140000 level, then 1.15000 on the upper trend line.
A break above the line would increase bullish optimism, and the next resistance we are looking for is in the zone of the previous high from November at 1.17000.
An additional resistance in that zone is the MA200 moving average.

Bearish scenario:

We need a negative consolidation and withdrawal of EURUSD to test the previous support zone around 1.12000.
In continuing the bearish trend, we are looking for support in the zone around 1.10000.

GBPUSD chart analysis

During the Asian session, the British pound strengthened against the dollar. The Prime Minister of the UK reiterated yesterday that despite the huge numbers of newly infected, there are no plans to introduce strict lockdown measures to restrict the movement of people. This gave support to the British currency. Currently, pair GBPUS is at $ 1.3545, representing a strengthening of the British currency by 0.06% since tonight’s trading. Tonight, at 20:00, a report from the last meeting of the US Federal Reserve will be published.

Bullish scenario:

We are now entering a critical zone for the pound, as we are close to the upper trend line and the potential resistance zone at 1.36000.
We have current support in MA20 and MA50 moving averages.
We need a break above the trend line to boost the bullish momentum.
The next resistance we can expect is in the zone around 1.38000, where the MA200 daily moving average awaits us.

Bearish scenario:

We need a negative consolidation from this level and a withdrawal of GBPUSD below the MA50 and MA20 moving averages.
Then we can expect to descend to the previous support zone around 1.32000.
If the bearish pressure increases, then there is a possibility that we can see the GBPUSD pair at the lower levels on the chart.
The first below the support is at 1.30000 psychological level; then the next is around 1.28000, the place of the previous support of the MA200 from 2020.

Market news

European news

Private sector growth in the eurozone weakened to a nine-month low in December, continuing a slowdown amid a resurgence of COVID-19 infections, the IHS Markita poll showed on Wednesday.

The combined production index fell to 53.3 in December from 55.4 in November. The result was slightly below the 53.4 forecasts. Although difficulties in obtaining input have once again been identified as a major obstacle for producers, the re-emergence of a pandemic across the eurozone has significantly hampered activities and demand in the services sector.

“As eurozone countries face the latest developments in the pandemic, it is clear that the risks to the economy are now greater because tighter restrictions on curbing the spread of COVID-19 are more likely than they were recent,” said Joe Hayes, a senior economist at IHS. Markit.

The final combined PMI for December confirmed that the eurozone economy weakly ended 2021, in line with the estimate that GDP grew by only about 0.2 percent in a row in the fourth quarter. Among member states, slower growth rates were recorded in France, Spain, and Italy, while Germany’s level of business activity mostly stagnated during the month. Germany’s recovery came to a halt at the end of the year as a decline in service activity offset faster production growth.

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