The EUR/USD pair went into recovery mode after its bearish wave from a one-year high stabilized near the two-month low of 1.0700 on Friday. Interestingly, the 61.8% Fibonacci retracement zone of the previous bullish rise has anchored that low.
From a technical point of view, the pair needs to form a long green candle to confirm the three candlestick morning star bullish pattern. Ideally, a close above Friday's high of 1.0757 could stimulate a recovery towards the key limiting zone of 1.0800, formed by the broken support line of the September trend and the 50% Fibonacci zone.
Notably, the resistance line from May 2021 is located in the same region. Nearby above the 20- and 50-day exponential moving averages (EMAs) could be the next challenge, which would likely delay the extension to the 38.2% Fibonacci of 1.0873. If the latter point gives way, we expect the price to face some consolidation near the psychological 1.0900 mark before accelerating to the 23.6% Fibonacci of 1.0957.
Unfortunately, the technical indicators are not promising a meaningful rally. Although RSI reached its February low near the oversold 30 mark, it is still below the neutral 50 mark. Moreover, the stochastic oscillator has not yet moved out of the oversold zone. Meanwhile, the MACD is some distance below its red signal line and well below the zero mark.
Still, the sellers will not be able to take the situation under control unless the price goes under the 200 EMA at 1.0684. If that happens, sellers' pressure could intensify towards the 1.0635-1.0600 area, where the bottom of the pandemic decline was reached in March 2020. A sharper decline could first test the 1.0575 barriers and then head toward the March 2023 low of 1.0515
The GBP/JPY pair has been in an uptrend since the beginning of the year, hitting a seven-year peak of 172.77 last Wednesday. However, the pair has not moved since then, seemingly unable to extend its recent rally.
The short-term oscillators are now suggesting that the bullish forces are weakening, but remain in control. Specifically, the RSI has stabilized above its neutral 50 mark, while the MACD histogram is softening both above zero and above the red signal line.
If the buying pressure intensifies, the seven-year high at 172.77 might be the first hurdle for the bulls. Breaking through that barricade could lift the pair to levels not seen in years, where resistance at 173.45 in March 2014 could hold back any upside attempts. If this barricade fails, the bulls could attack the April 2015 high of 175.00.
Alternatively, if the positive momentum wanes and the price turns lower, the recent support at 171.20 could be the first line of defense. After this progress, the decline may slow down at the 169.26 December resistance, which may serve as support in the future. A fall below this area could trigger a slide towards 166.83 support.