EURUSD has jumped 3% so far in April while GBPUSD is up 2.4% after seven trading sessions of back-to-back increase. Both currency pairs, very popular with traders, crossed important round levels, 1.2000 and 1.4000, which prompted short-term traders to bet on a pullback from the local extremes.
But such an approach by short-term speculators assumes that the growth of those pairs from the beginning of April is a correction from the drop in January-March. We suggest looking at the situation from a broader perspective.
The slide of EURUSD from January to March this year is just a corrective pullback after the growth impulse from March to December 2020. It was a classic 38.2% Fibonacci retracement of the rally from the lows of March 2020 to January 2021. On Monday, EURUSD saw a robust rise from the 50-day average, which acts as a strong confirmation signal of bullish sentiment. EURUSD could easily go back to the highs above 1.2250 or even 1.2350, with little to no pullback. If we look at longer-term growth targets, they could be 1.3400 (161.8% of the March-January rally) or even 1.4000 (area of 2014 highs).
GBPUSD returned to the upside last week after less than a month and a half of a 23.6% Fibonacci retracement of the May-February rally. That is, it has been able to swim against the current for longer and even renewed highs, and its correction in previous weeks was less profound.
Having managed to hold at 1.4000, GBPUSD could quickly head towards the February highs above 1.4240, which is also near the 2018 peaks. A fast and direct path to 1.5000, an important round level and all-time highs since the Brexit referendum, is already opening up.