GBP Gaps Lower Over Weekend Brexit Developments

Daily Forex Market Preview, 2/22/2016

The British Pound opened lower today following the developments over the weekend where British PM David Cameron managed to renegotiate Britain’s EU membership. He was however met with skepticism as the Brexit campaign gets underway. The referendum is due on June 23rd, 2016. Meanwhile, despite strong inflation data on Friday, the US Dollar remains on the back foot, trading mixed across the board.

EURUSD Daily Analysis

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EURUSD (1.11): EURUSD managed to close on a modestly bullish note on Friday, supported by the 20-day EMA. Prices continue to trade in the support zone of 1.113 – 1.1105 at the time of writing. A break below 1.1105 could trigger further declines in the near term with the next support at 1.095 – 1.093 coming into play. To the upside, the gains are likely to be limited near 1.1285 – 1.130. The minor hidden bearish divergence which shows a higher high against price’s lower high is likely to gain traction if the support at 1.1105 gives way unless EURUSD managed to close strongly above 1.113 support.

USDJPY Daily Analysis

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USDJPY (112.9): USDJPY is currently attempting to move higher following Friday’s bearish close. Price is trading near the support level of 113 – 112.5 level following the decline after forming the hidden bearish divergence. If the support holds, USDJPY could be looking to move higher towards 117 – 117.25 which marks the next level of resistance, but only if price manages to rally above 114.25 – 114.65 minor resistance. To the downside, failure to find support at 112.5 could see USDJPY post new lows, testing 111.5 – 111.0 near the previous lows.

GBPUSD Daily Analysis

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GBPUSD (1.42): GBPUSD gapped lower today and is currently looking to establish support near the dynamic median line on the daily chart. The daily time frame shows a bullish divergence building up with the higher low in the Stochastics representing lower low in prices. The correction could see a move to 1.4635 marking a test of the previous resistance. On the 4-hour chart, prices remain consolidated near the support at 1.435 – 1.43 and exposes the risk of a dip to 1.42. A convincing close above 1.435 will confirm the upside bias in GBPUSD towards 1.4635.