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 Keir 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.

 

Procastination

I meant to include this entry last week, I was disrupted by my travel to Kuala Lumpur to visit my mum and brother. 

Having said that, I did bring my laptop on my trip, together with my portable monitor. The set up enable trading function as long as there is network connection. Plus, I have managed to work on the charts during the weekend. So what stopped me from proceeding?

Nope, it is not that I am lazy, because I was motivated to work on my other interests. The only thing that I dragged was the struggle I needed to go though in completing the essay, including entering the data values such as resistance and support levels. 

In adidtion, my interest in trade are Hang Seng and Nikkei, while Dow Jones provides a rough gauge of the market health. My interest for GBP and EUR is much lower on the ladder, my motivation on studying these 2 counters and their relationship is low unless some impact on international market.

My last entry on these 2 countes is Divergence  between GBP and EUR dated 3rdc September 2023. I was with the impression then that EUR with confirmation on a continuation downtrend while there is yet indication on GBP. It is possible at the time that GBP and EUR will diverge from each other.

The one chart that I did not include in my earlier study was EURGBP which reveal their relationship.

Fig 1. EURUSD weekly chart

As per my prediction in my earlier entry, EUR broke down crossing the previous low of 12th March 2023 before bouncing back up. However, EURUSD failed to cross its previous peak of 16th July 2023, stopped by its Bollinger band.

As of this week, it has fallen back to below its 144-week moving average.

I believe that the direction is general direction is still down because EUR behaves like it is in C wave of the counter wave. 

Using Projection, it will find support at 1.0643, 1.0324 and 1.0096. I believe higher chance of EUR reaching between USD1.0096 to USD1.0324.

There is a chance that EUR will fall further due to its major set up, 1.0448 is crucial level to watch for. Should this level be violated, it is possible for us to see a target of 0.951676 to0.845533.

If EUR manages to hold of its descend, we may see a climb of up to between 1.1572 to 1.22378.

Fig 2. GBPUSD weekly chart

GBP did not deviate from EUR since my last prediction, it however, did not descend as much as EUR and did not cross the previous low of 1.1803 before rebounding upward. while it congests after its climb, it stays above the 144-week moving average.

Furthermore, there is not yet strong indication of a reversal.

I feel that there is a higher chance that GBP is going to get stronger.

It is possible for GBP to reach higher between 1.381765 to 1.492465.

There is however a chance for GBP to reverse downward. 1.2037 is the level to watch out for as this will become its previous low, this also coincides with its 61.8% projection support at 1.211155. Should this level be breached, we may see 1.168601.

It seems for the time being, both counters are at their junctions with some uncertainty of their directions.

so are they deviating from each other?

Fig 3. EURGBP weekly chart

EURGBP seem to be on a down trend while within a congestion. Furthermore, its recent move pushed the pair to below the moving averages, we may see further weakening of EUR against GBP. 

That present, the pair hovers above 0.8470 the 61.8% projection with support at 0.8470 and 0.85462. Breaking this, the next level of support will be 0.82721.

What may be the reason for such deviation?

After leaving the EU, there was a sense of euphoria in UK, with many dreamt of a bright future. However, after being part of EU for so long, it gained much influence from European culture, including those negative aspects. UK turned left, focusing on woke culture and becoming weaker. 

In the process it is losing its own culture and heritage, embracing the culture of Europe.

It was a right move to leave the EU. At the same time, there is internal conflict as certain fraction are in fear of independence and the lack of external support. they have forgotten that UK was once a strong nation with glorious achievements. 

The internal differences need to be flushed out before it can recover. I feel that UK has begun to realize that they have no other to depend on and they have to get back on their feet.

EU on the other hand, has maintained the same status as before, not learning from the Brexit even. In fact, many members of the EU lack strong economical drive pulling the whole EU down. The issue here is: EU is oblivious to the issues it is facing and lacks political will to reform. It is bulky and lacks the momentum to face changes in the world. In addition, there is a lack of unity between members as each has their own vested interest. 

EU needs to unify in their goal, or the alternative is continuing deterioration.

EUR GBP comparison

 I was going through my earlier entries and noted some issue on GBPUSD chart in Currencies April 2023 update. The chart did not seem right and I was wondering if it is of a different time frame.

It also led me to consider that I should do a comparison on the 2 currencies, afterall they are to me a couple who have just gone through divorce. It also brought up the thought as to who is the husband and who is the wife in this separation. 

Based on recent statistics, the woman is the one who initiate the divorce as she is the one who is normally unhappy with the situation at hand, and most of the time she would have found a new man to attached to for security purpose.

So in this case, I can justify that UK is the woman, UK was not happy with the restriction brought forth by the union and partnered up with its old flame, US of A before the divorce commenced.

Anyway, side talk over. Let's see how both currencies are doing as individuals and when compared to each other.

Fig 1. EURUSD, GBPUSD & EURGBP weekly chart

To begin with, both counters made a strong re-bounce on week of 25th Sept 2022, only to be stopped by their moving averages. 

EUR to me is stronger than GBP, since it penetrated through 55-week moving average and only to be stopped by the next level of 89-week. 

GBP on the other hand was stopped by 55-week moving average, twice before it could move higher.

Lately both encountered the highest moving average that I placed, 144-week moving average. While GBP stopped below 144-week moving average, EUR managed to rest above.

GBP seems weaker than EUR in all sense.

For the time being, resistance I see for EUR are as follows: retracement lines between 1.1280 to 1.1757 and a projection target of 1.14373 to 1.200705.

GBP on the other faces resistance at 1.2761 to 1.3429, while a projection target of between 1.3088 to 1.3806.

If this direction is consistent however, there is another currency in trouble, USD. Because USD is weakening against both currencies.

To further confirm the hypothesis that EUR will fare better than GBP, let's analyze EURGBP. 

There seems to be a huge reversal on 25th sept 2022, making it plausible that GBP is improving against EUR. The counter seems to be in a congestion phase after support at the moving averages. While it seemingly climbing back up, it gives me a feeling of lacking in momentum. 

The counter also seem to be in a sub-wave congestion downward, meaning a potential up-trend after then. But because its present trend has yet to complete, I refrain from estimating its up-ward potential until a more certain indication.

So for the time being, the trend is down, with projection support at 0.8713, which EURGBP is right above. A further support level of 0.8512 should this be broken. 

One thing to note here is the 55-week moving average, which lies right below the 61.8% retracement as well as projection, giving quite a good support for this pair. There is a possibility of reversal, but I have to wait and see before concluding.

Currencies April 2023 update

Time passes very quickly, it seemed that we just celebrated new year, then Chinese New Year, the passing of my father and now we are into the second quarter of the year. May be I am getting much older now?

anyway, I have recently rekindled an old hobby of mine, I am now back into comic drawing. Drawing has been an important part of my life since I got to know the world. My first drawings were on the wall in my grandmother's room, a fish, or part of it. 

My uncles were in school at the time, and they were studying Biology, I managed a glance of the human organs in particular the digestive system. I drew a fish with the human digestive system as a result.

It was through years of work life that I started to lose my ability in drawing, the longer I was in the work force, the less imagination I have. So much so that I held a pencil in mt hand, a piece of paper in front of me, and it went blank for hours.

My flame in drawing grew recently when I found interest in perfecting my sketches of the female anatomy. Yes, I love drawing female, why? I remember one artist said when he was asked the question," because I love women."

anyway, at this point of time, it is not about women, or my sketches. Let's check on the sketchings of the charts.

I have recently heard from a youtuber that the US politicians were focusing on the wrong thing such as woke culture and "inclusivity" when the true problem is the decline of the USD.

The USD decline was mentioned often. However, It is recently facing more threat than before, with news that the Saudi and China going to trade oil using CNY, and that China's influence growing stronger to the extend that it initiated a peace talk between Saudi and Iran. Further more, an increasing number of countries are joining BRICS, a coalition to counter the strength of USD.

 I did an up-date on USD in April 2023 titled Currencies March 2023 update, While there were signs of upward reversal, I was uncertain on a few pairings. A month has past now, how is the USD doing right now?

Fig 1. SGD weekly chart

SGD did not go into correction. 

At this point of time, it failed to break through the 21-week moving average. Moreover, the point which it reversed coincided with the 61.8% projection level support of a major move. I figure that it will head towards its next level of support (100% projection). 

While hesitating at this moment, it nevertheless resisted by the 8-week moving average, it is indicative that USD will slide lower against SGD. 

During its last low, the counter did not touch its 100% projection support before its debounce, I suspect it will not stop at 100% mark and move further towards its 127% projection support at 1.26.

The correction upward has also generated another projection measurement. Its 61.8% projection support coincidentally is near the 127% projection level at 1.2679.

Fig 2. JPY weekly chart

Similar to SGD, JPY has also fell of after its correction upward. It is presently supported by its 55-week moving average. However, it also seems to lack inertia to reverse upward, giving me a feeling that it is congesting for a flag formation. 

It is however, floating above the 55-week moving average, which coincidentally at its 38.2% retracement support.

I am still uncertain of its trend at the moment. So I head back to a bigger picture.

As long as there is no violation of its formation, I will still consider its trend to head downward with support at between 113.220 to 122.59. If it is heading up, it will face its Bollinger resistance at 140.28

Fig 3. EURUSD weekly chart

I am using the chart on my trading platform as it has more Fibonacci tools than finance.yahoo.com. However, it only provides EURUSD pair and not the other way round.

EURUSD is presently retesting its previous high, coincidentally meeting the 144-week moving average resistance. It has not yet violated the old high.

For the time being, the formation gives me 2 possibilities: Support of between 0.8224 to 0.9308; Resistance of between 1.1436 to 1.2022.

Fig 4. GBPUSD weekly chart

Unlike EURUSD, GBPUSD chart looks rougher, probably because of BREXT and its present political turmoil. Of the 2, GBP seems weaker than EUR.

The general trend of GBP is down against USD, even with the recent up-surge, the present measurement unable to see it breach the previous high of 1.4242, with resistance between 1.3104 to 1.3903.

On the downside, there are 2 sets of measurements, a more recent one with up to 127% projection support of 1.04967, which has been tested before reversing up. The other with support between 1.190 (which has been crossed) and 0.9223. 

Some time it is sad to see such powerful nation goes into deterioration simply because self centered politicians who are good in speech yet incompetence in running the country. They ride on the band wagon of woke culture not because they believe in its cause, but it guarantees their own political survival. 

Going through world history, it is not difficult to see that an empire is reaching its death bed when the focus of the government is not focusing on the big issue to bring the country to the next level, but to focus on insignificant issues that do not even affect the country progress in any way. 

When the west is focus on avoiding hurting feelings of a certain people, they will lock themselves in a shell and shrink while other grow. 

GBP and EUR continue with their downslides

 I can't believe it was November last year that I wrote about EURUSD and GBPUSD. Well, it was March this year that I did mention about these 2 counters, but that chapter was more on USD than EUR and GBP. 

So what is happening to these 2 counters right now? 

Fig 1. GBPUSD and EURUSD weekly chart

In my last entry on GBP, I set a short term target of 1.31 and it is presently crossing the mark. It rebounced from the support level tested the 8-week moving average and continued its down slide. It is suuported by the fact that the 21-week moving average is now crossing the 55-week's. While the moving average of higher time frame (55, 89 and 144) are still in alignment of an up-trend, they are converging downward. The chance of downward movement is still more probable. 

I am wondering if this has to do with Boris Johnson visiting Ukraine, promising lots of funds to support the war? After wall, it is on the last day of trade that GBP broke the previous low, the day Boris Johnson arrived at Kyiv.

My last entry on EUR mentioned that its direction was clearer as the counter has dropped below all moving averages. as I look at it this week, its down slide is more determined.

Firstly, the 89-week moving average made a golden crossed with 144-week, secondly, EUR tested the 8-week moving average and retreated with a long bar moving downward.  It even attempted to cover the gap and failed, further supporting the decision of downward thrust.

With both counters seemingly on a downslide, which one might I want to choose for short trade?

Fig 2 GBPUSD and EURUSD daily chart

Okay, I am speaking hypothetically. I do not really trade in forex, my system is not really suitable for Forex. 

If I am to trade in forex, I will choose EURUSD looking at gradient of their decline on daily basis. The gradient of GBPUSD is gradual and looks as if it is on a counter wave and would bounce up any time. It does not mean that there is a change in trend it might just complete a 3 wave counter wave pattern ending at the 55-day moving average @ 1.326697. If it is to maintain its course downward, its support levels will be 1.290272 and 1.265551.

EURUSD on the other hand has a steeper drop and if correct the next few days might be resisted by the 8-day moving average @ 1.094037. On the down side, it is supported at 2 levels, 1.075807 and 1.049526.

Possibility of GBPUSD

I have stopped my up-date on my blog for a while. I have decided to go full time on trading. To be honest, getting it right on chart is easy, doing it right on trading is really something else. The difference between the is that in chart reading, I do not need to estimate how I would reach the objective, trading on the other hand needs to. While the target may be clear, the route of getting there may be hazardous. 

It really too quite a bit of effort to get my trading strategy right.

Anyway, let's go into charting, and today I will focus on GBPUSD.

        GBPUSD weekly chart

GBPUSD has been rising for almost a year since March of 2020. It reached its highest point in Febuary 2021 and retested this limit in May 2021. IT was on the decline since then, breaking through one moving average support after another. 

On moving averages, 8 crosses 55 weeks moving average with a golden cross. and it is possible that 21 weeks moving average twill follow suit. 

The only thing that make me feel uneasy is haphazard movement of this counter on its down trend. There are a lot of overlapping in the process. Never-the-less, based on the behavior of  the moving averages, tendency of downtrend is high. 

What are the support level of this tend then? There are a few levels to consider based on Fibonacci retracement, The immediate level would be 1.3165. There other is  the band between 1.2416 to 1.2497. There are more support in the later mentioned as retracement coincide with projection support.