Morning Forex Review: EURUSD Nears 1.2500

Risk aversion is hitting the markets as US equities sold off hard to end the day yesterday. As such, the dollar which had been weaker for most of yesterday morning managed to trim its losses and head higher on the day. Looking ahead, forex traders will be awaiting US Retail Sales. A better than expected number could reignite risk buying and lead to dollar weakness.

EURUSD

The weekend can't come quick enough for the EURUSD, as the only thing that will keep the pair from falling is 48 hours of no trading. The EURUSD keeps falling even as on Wednesday positive German GDP numbers were released, and yesterday there was a bank holiday in most of Europe. Technical wise, the pair needs to stay above 1.2500 today to show any sense of strength. If the pair trades below that figure, than it will most likely lead to additional pessimism to start of next week.

Support/Resistance 1.2500/1.2610

GBPUSD

Along with the euro, the pound has been a big loser as Wednesday BoE Inflation Report has spooked Forex traders. Even with a coalition in place and budget cutting rhetoric form the Conservative Party, traders are worried that the BoE may need to resume QE, which could lead to further pound devaluation. The GBPUSD did form a nice base around 1.4575 this morning, so we may see this support level holding over the short term.

Support/Resistance 1.4575/1.4700