Euro plunged along with most currencies. Why’s that?

09 August chart overview for EURUSD and GBPUSD

EURUSD chart analysis

During the Asian trading session, the euro found support at the 1.02000 level, followed by a bullish impulse that took the pair up to the 1.02500 level. For now, we are consolidating around that level. The euro is trading at 1.02300, representing a 0.38% advance against the dollar. We need a positive consolidation above the 1.02500 level to continue the bullish option. After that, the euro would have a chance to continue towards the 1.03000 resistance zone. For a bearish option, we need negative consolidation from this level. We would then see a pullback to the 1.02000 support zone this morning. Break EURUSD below that zone, and the pair crosses below the moving averages, which could further strengthen the bearish pressure. Potential lower targets are 1.01500 and 1.01000 levels.

GBPUSD chart analysis

Pair GBPUSD made a positive move this morning during the Asian trading session. The pound has moved from consolidation around the 1.20800 level, and now it is above the 1.21000 level. Today’s maximum was at the 1.21300 level, and now there is a new higher consolidation above 1.21000 if the pound manages to stabilize. The MA20 and MA50 are on the bullish side, while the MA200 moving average is in the zone around the 1.21500 level. To continue the bullish option, we need a continuation of positive consolidation and a move above the 1.21500 level. After that, we should try to climb up to the 1.22000 level. We need a negative consolidation and pullback below the 1.21000 level for a bearish option. If that were to happen and we see the pound fall below this level, it would open up a space for us towards the 1.20000 lower support zone.

Market overview

BoE Deputy Governor Dave Ramsden said the bank would likely have to raise interest rates more than planned to deal with inflationary pressures. Last week, the central bank increased rates by 0.50%, but bank officials continue to warn of a looming recession that could last until 2024.

Tracking technical factors and the prospect of potential fiscal stimulus in the fall, the depth of the recession is likely to be much less than the BoE’s main scenario suggests, Mizuho economist Colin Asher said, adding that the outlook is not good. On Friday, GDP data will be published, and they will give us a picture of the state of the British economy.

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