Euro - British Pound Exchange Rate Nears Major Top

The Euro/British Pound’s ascent has been nothing short of astounding, and weekly oscillators are near the most overbought levels since the Euro’s inception. We likewise note the extreme volatility in the EUR/GBP as of late—the pair has registered several record single-day and weekly advances through recent trade. Given that there is no historical precedent for such elevated Euro/British Pound exchange rates, it is difficult to put a price target on any further potential advance. Yet it is important to point out that such extreme currency volatility tends to occur at major shifts in sentiment, and it may be only a matter of time before the EUR/GBP reverses. Though it is obviously dangerous and difficult to go against such impressive uptrends, our Euro/British Pound bias remains firmly to the downside through upcoming trade.





The Euro/Swiss Franc has posted a fairly sharp reversal off of the confluence of its 200-day Simple Moving Average, the 78.6 percent Fibonacci retracement of the 1.6370-1.4300 move near 1.5900, and the makeshift top of a plausible downtrend channel. Our subsequent trading bias remains to the downside, but it seems the pair has found makeshift support at its 50-day moving average near current market price. More substantive support can be found at the 50.0 percent Fibonacci retracement of the 1.4300-1.5900 move at 1.5100.





The Euro/Canadian dollar now trades near record-highs, and there are comparatively few indications that we are at a major top. The next topside target is logically the highs seen briefly after the Euro’s inception in 1999 near 1.8000. The shorter-term picture is somewhat less clear. Failure at the psychologically significant 1.7500 mark leaves near-term momentum to the downside, but the lack of truly noteworthy support makes it difficult to establish price targets. The 1.6750 mark has thus far held further declines, but a break would signal that a run towards 1.6500 is likely.





The Euro/Australian Dollar has been consolidating within a progressively narrower ascending triangle through recent trade, telling us that selling pressure has been sufficient to hold back any further advance. We could potentially see a break to the topside, but bulls are clearly showing their exhaustion and a break could pave the way for a larger correction. In the meantime, price looks likely to remain within the triangle formation; the psychologically significant 2.000 mark could contain a decline, while 2.1000 poses similarly stuff barriers to the topside.





The Euro/New Zealand dollar has similarly been consolidating within a fairly wide range, and near-term price action made decide more medium-term direction in the volatile pair. A hold of current resistance near market price levels would tell us that bulls have run out of steam, keeping our bias firmly to the downside. A break higher would conversely target a move towards recent spike-highs near 2.460. Our bias is currently neutral, but the next 24 hours of price action will likely decide direction for the week ahead.



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