EUR/USD and GBP/USD turned down, but in different fashions that made the cross interesting as well.
What’s next for these two major pairs? The team at Citi revisits the charts:
Here is their view, courtesy of eFXnews:
In its weekly note to clients, Citi looked at the long term chart of EUR/USD and  GBP/USD, and identified the many similarities between today with the 1990’s. Here are some of these key similarities as outlined by Citi along with its takes on the trends and levels to watch near-term across the two pairs. .
Last cycle: EURUSD rallied for 7 years – This cycle: EURUSD rallied for 7 years
Last cycle: GBPUSD collapsed from above 2.00 before the broader ERM crisis in Europe – This cycle:GBPUSD collapsed from above 2.00 before the broader European Bond Market crisis
Last cycle: EURUSD rallied 16.5% within the downtrend (into the high in 1998) – This cycle: EURUSD rallied 16.3% within the downtrend (into the high in 2014)
Last cycle: The subsequent strong rally on GBPUSD in 1999 was 1268 points – This cycle: The bounce this time was 1249 points into the high last week.
“Overall what the picture above indicates is that the corrections up on EURUSD and GBPUSD both look like they have approached an end and that the respective downtrends can now resume with positioning having been significantly reduced but the underlying backdrop unchanged,†Citi argues.
“In the short term the levels in focus are 1.1036-52 on EURUSD and then the trend low at 1.0458. In GBPUSD support is met at 1.5459-98 and below there at 1.5074-89 and then the trend lows at 1.4566,†Citi adds.
For lots more FX trades from major banks, sign up to eFXplus
By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.
