Is the DXY suggesting that Monday’s EURUSD breakout will fail? What about GBPUSD?
Watch today’s video to see exactly how I’m trading these markets this week, including key levels to watch and potential targets.
EURUSD Outlook
EURUSD broke out on Monday, closing the day above the 1.1720 confluence of resistance. It’s the first time the euro has been above that mark on a daily closing basis since late July.
However, the question is, can EURUSD bulls hold 1.1715/20 as new support?
So far, the euro is bouncing from the July trend line. But we’ve seen failed breakouts from this range before, so I’m not rushing to call this a confirmed breakout just yet.
The DXY is also holding below 97.70 following Monday’s break. However, I’m not fully convinced that dollar bears can win this battle.
For now, we have tentative breakouts from both markets. However, suppose the EURUSD fails to hold above 1.1715 and the DXY falls below 97.70. In that case, we may have some failed breakouts (fakeouts) to trade this week.
Remember that this has to occur on the daily time frame. An intraday close beyond those marks isn’t enough to confirm a fakeout.
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GBPUSD Outlook
GBPUSD tested a significant resistance on Tuesday at 1.3580. I’ve discussed this level as one to watch several times in recent videos.
The pound has spent the last few weeks bouncing between 1.3380 support and 1.3580 resistance.
Until we get a daily close above 1.3580, GBPUSD is vulnerable to another pullback. That’s especially true if the DXY reclaims 97.70 to flip it back to support this week.
The jury is out on that for now. But there’s no question that 1.3580 is a significant test for GBPUSD bulls.
Like EURUSD, the future direction for GBPUSD hinges on what happens at DXY 97.70. It’s resistance for dollar bulls as I type this, but a daily reclaim would be bullish for the USD and bearish for the pound.
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