18.09.2020: EUR and GBP to hold gains against USD? Outlook for EUR/USD and GBP/USD

Today, traders are likely to sell the US dollar. As expected, the disagreement between the Fed’s representatives did not change investors’ attitude to the US dollar.
Market participants have ignored the UK retail sales data. The indicator advanced by 2.8% compared to a climb of 1.4% in the previous period. However, the final reading was below the forecast of 3.0%. A rise in consumer activity has offset the recent decline in inflation.
The zero reaction could have been caused by the fact that investors are mainly focused on the Brexit issue, especially after yesterday’s announcement made by Ursula von der Lein. The President of the European Commission expressed confidence that London and Brussels would sign an agreement in the near future. At the same time, the UK Parliament is still discussing the Internal Market Bill. Taking into account that the UK needs a comprehensive trade agreement more than the EU, members of the Parliament are likely to smooth over the most controversial issues of the bill proposed by Boris Johnson. It is obvious that the market will react positively to such changes. In other words, news from London is expected to boost the European currencies. Of course, the pound sterling will be a more active performer than the euro. Notably, a new round of the negotiations between the UK and the EU is scheduled for next week.
The euro/dollar pair met the support level of 1.1755 repeating the cycle logged on August 21, 27 and September 9. After that, the price slowed down and rebounded. The pair is still trading within the range of 1.1700/1.1810/1.1910. The pair has been trading sideways for seven weeks already.
It is quite possible that the quote will continue moving between the levels of 1.1810/1.1910. Local deals could be opened with the targeted level situated on either limit.
There are two possible variants of the pair’s movement. According to the first one, the price may break the limit of 1.1910. If it consolidates below 1.1920, the structure of the channel may alter. In this case the pair could rise to test the level of 1.20 (*). The similar situation was recorded on August 18 and September 1.
According to the second scenario, the euro/dollar pair will break the middle level of 1.1810 to approach 1.1755.
The pound/dollar pair slowed down near the psychological level of 1.3000. Later, the pair rebounded and began hovering within the levels of 1.2930/1.3000.
If the price consolidates above 1.3035, it is likely to resume rising after a fall logged on September 1.
Otherwise, the quote will go on fluctuating within the levels of 1.2770//1.2885//1.1300. If the price fixes below 1.2930, it may drop even deeper to 1.2885. However, if the quote fixes below 1.2865, it may slump to 1.2770.


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