Key Highlights
- GBP/USD declined sharply below the 1.2620 support zone.
- It is now attempting a recovery wave above the 1.2550 level.
- EUR/USD is showing signs of more losses below 1.0500.
- The US ISM Manufacturing Index declined from 57.1 to 55.4 in April 2022.
GBP/USD Technical Analysis
The British Pound declined heavily after it broke the 1.2800 support against the US Dollar. GBP/USD traded below the 1.2720 support to enter a bearish zone.
Looking at the 4-hours chart, the pair tumbled below the 1.3620 level. It even settled below 1.3600, the 200 simple moving average (green, 4-hours), and the 100 simple moving average (red, 4-hours).
Finally, there was a move below the 1.2500 level and the pair traded to a new multi-month low at 1.2411. It is now correcting losses above the 1.2500 level. There was a move above a short-term bearish trend line at 1.2520 on the same chart.
An immediate resistance is near the 1.2600 level or the 23.6% Fib retracement level of the key decline from the 1.3090 swing high to 1.2411 low.
The next major resistance is seen near the 1.2750 level or the 50% Fib retracement level of the key decline from the 1.3090 swing high to 1.2411 low. A close above 1.2720 and 1.2750 could open the doors for a move towards the main 1.2920 resistance.
If not, there is a risk of more losses below 1.2500. The next major support is near the 1.2420 level. Any more losses may perhaps open the doors for a move towards the 1.2300 support zone.
Fundamentally, the US ISM Manufacturing Index for April 2022 was released yesterday by the Institute for Supply Management. The market was looking for a rise from 57.1 to 57.6.
The actual result was disappointing, as the US ISM Manufacturing Index declined from 57.1 to 55.4 in April 2022. Besides, the ISM New Orders Index declined from 53.8 to 53.5.
Looking at EUR/USD, the pair is still trading in a bearish zone and there is a risk of a move below the 1.0450 level.
Economic Releases
- Euro Zone Unemployment Rate for March 2022 – Forecast 6.7%, versus 6.8% previous.
