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GBP/USD Slices Through Major Fib Level, EUR/USD Triangle Persists

GBP/USD Slices Through Major Fib Level, EUR/USD Triangle Persists

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- EURUSD maintains triangle range post-EZ GDP figures.

- GBPUSD slices through key Fibonacci level.

- Hints of Future Easing Keep Euro Pinned Lower, for Now

The USDOLLAR Index is pressing its yearly highs, even though EURUSD and GBPUSD are diverging as it happens. Likewise for AUDUSD and USDJPY. There is a clear dichotomy right now: GBP and JPY are the weakest of the bunch, while AUD and EUR are managing to hold up versus the USD.

'Held up' might be the most appropriate way to describe EURUSD price action for the past week. We've covered the symmetrical triangle in the pair already thisweek, but the consolidation has persisted with only faint attempts for a break in either direction. Let's see which breaks first: $1.2508 to the upside or $1.2393 (the weekly range).

The Euro is in an interesting spot fundamentally, now that Q3 GDP data has proven itself to be better than market expectations. While much negativity persists about the Euro-Zone, and the overhang of sovereign QE down the road keeps Euro bears satisfied for now, we must acknowledge that things have gotten less worse (but not necessarily better) in recent weeks.

The Citi Economic Surprise Index has rebounded to -29.1 today, continuing what has been a sharp rebound from the yearly low on October 14 at -57.3. With the market so short the Euro and long the US Dollar already (see Senior Technical Strategist Jamie Saettele's recent COT report for details), we can't help but think that a few more weeks of relatively improving Euro-Zone data, and the ECB may offer some misguided optimism that provokes a short covering rally.

Read more: EUR/USD Nears Symmetrical Triangle Break, GBP/USD Eyes $1.5721

--- Written by Christopher Vecchio, Currency Strategist

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.