13.05.2022: EUR and GBP continue losing value. Outlook for EUR/USD and GBP/USD.
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Although a rebound in the pound sterling has been expected since yesterday, today, the main European currencies are trading sideways. Only the euro is manifesting signs of a rise amid a less than anticipated decline in industrial production. Economists had expected a 1.0% decline in industrial production after a rise of 2.0% in the previous period. However, on a yearly basis, the indicator dropped just by 0.8%. Notably, the previous figures were downwardly revised to 1.7%. This fact stopped the euro from showing a fully-fledged rebound. Although the market situation is almost the same, both the euro and the British pound have stopped falling thanks to high oversold levels. However, the currencies will hardly rebound due to poor macroeconomic reports. It is highly likely that they will close the trading week at the current levels, whereas a rebound could take place only early next week. Against the backdrop, the euro/dollar pair broke the lower limit of the range of 1.0500/1.0600, where it was trading for two weeks. This action caused high interest among speculators and a jump in the volume of short positions. As a result, the euro lost about 160 pips. Thus, if the price approaches the local low recorded in 2016, the downward movement may slacken, thus allowing the pair to rebound. According to the alternative scenario, traders will ignore the oversold signals, thus supporting the inertial movement. In this case, the price settlement below 1.0325 on the four-hour chart will lead to a new rise in the number of short positions. Meanwhile, the pound/dollar pair slowed down near 1.2165. The current price hovering could be considered an accumulation process. This, in turn, may spur a new wave of speculative activity. If the existing stagnation results in a change in the market sentiment, the pound/dollar pair may show a local acceleration soon. In this case, traders should open buy orders above 1.2250, whereas sell orders could be initiated below 1.2165.
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