USD reversing against EUR and GBP?

 My update on EUR and GBP was quite some time ago in my entry It is tumbling down, but it is not yet for Dow Jones dated 8th September 2024.  This was more than a year.

Since my present series is on currencies began with MYR, I believe it is a good time to check on these 2 counters to look into their health, especially when US is officially entering a war against Iran with Israel.

To some extent, I do not really agree with Trump going to war, this is a marketing part, where he positioned himself as a non-warfare president. In a certain sense, he failed to uphold this narrative.  

At the same time, why should he?

Trump was not rewarded for his earlier action. He was moving towards a peaceful direction, and the result was continuous bully from all sides. 

Nobel simply refused to acknowledge his effort for peace; his attempt to brokerage peace between Ukraine and Russian as humiliated by both sides; Britain and members of European Union abused his attempt to mediate to strengthen their link with Ukraine to continue their pet project against Russia; and Putin mocked him by agreement to cease fire while increasing the intensity of his attack.

It seems like nice guy coming last is true here.

So what good does he get by heading into war?

Americans have been against staging another war for a long time, afterall, US of A has not fare well in warfare since after WWII. They lost in the Korean and Vietnam war, followed by the 2 rounds of Iraq wars that drained a lot of their resources, not to mention the war of Afghanistan that ended with an embarrassed withdrawal of the US troop. 

The people of USA are tired of losing.  

First off, US operation in Venezuela shocked the world, not because of the so call "invasion", but how powerful and precise the US military might be. They entered a country's capital that was fully fortified, captured the president and have him shipped back to USA for trial.

This does not earn him respect, but induced fear into all the Central America countries that has been defying USA for close to a decade. All these countries intentionally opposed USA while enjoying the goods of US wealth. the operation in Venezuela is a wakeup call to all of them, making them realize that US has the power to disable them and chose not to all these times. Now even Cuba is seeking peace talk with US, something that had not happened since JFK.

The most important thing here is that he helps USA to regain its pride. This is what he promised the people of USA, they will have so much winning until they cannot take it anymore.

The attack on Iran on the other hand is to give the United Nation, Russia and China the middle finger, and demonstrating how far behind are the number 2 and 3 in military power against US. As such Trump has to win this war against Iran, the key word is 'fast', the longer it drags on, the lower the support from home it will be.. Not only that he has to make sure that he can succeed when all his predecessors failed, which is the rebuilding process.

Europe and Britain reacted differently on this Iran war. Europe chose to support Trump since the war started (with exception of Spain), Britain led by Kier Starmer on the other hand, decided to have a weak spine and tried to chicken out, being called out by Trump. 

Anyway, enough of my rant. I am supposed to just look at EUR and GBP. What I see on both GBP and EUR are similar.

Fig 1. EURUSD weekly chart

EURUSD peaked on 25th January 2026 with a high of 1.20827. At the same time a shooting star was formed. It was on a retreat since then, resisted by its 100% (1.19187) of its major projection.

It however, was not decisive in this direction, reason? Overlapping bars and a lack of momentum. It is also support by its 100% (1.16332) to 127% (1.15164) projection on its decline. Further to that, it is also coming close to its 55-week moving average of 1.153020. This also coincide with its 127% projection of 1.15099.

While with sign of divergence from MACD, it is yet to show confirmation. 

There may still be a chance that EUR to climb back up one more time before a true reversal to come true. It may crawl back to test its 100% projection again. If it manages to breakthrough, its next level of resistance will be its 127% projection of 1.23923.

Fig 2. GBPUSD weekly chart

Similarly, GBPUSD reversed on25th January 2026 with a shooting star. difference here is the overlapping of the bars is more consistent. Like EURUSD, there is also divergence on its MACD.

Difference from EURUSD is that it managed to reach its 55-week moving average of, further to that, a hammer is formed while supported by this moving average of 1.33080 as well as its 61.8% projection of 1.33896. It is possible that GBPSD will reverse up in the coming week. However, it requires bar confirmation, as this in conflict with its MACD behavior that tends to cross downward.

If it is to trend downward, I will see a much stronger support at its Bollinger envelop of 1.31033. On continuation upward, its next level of resistance will be the other envelop of 1.37993, which coincide with the 61.8% of a major projection of 1.37840.

In conclusion, there is a tendency for USD to strengthen against both EUR and GBP, but not just yet. With USA and Israel, the only ones into the war, they are the one spending money, it will also mean a weakening of USD during this period, if USA is to be dragged in a much longer period of time, it will really lead to USD to further deteriorate against ALL other currencies.