EUR/GBP trades in near five month low, EUR/USD stays side-lined while USD/CNY stabilizes
Outlook on EUR/USD, EUR/GBP and USD/CNH following eurozone and UK flash January PMI releases and as China unexpectedly cuts bank reserve requirements.
EUR/USD remains side-lined
EUR/USD briefly shot up to $1.0932 on Wednesday but then re-entered its sideways trading range amid weak eurozone purchasing managers index (PMI) data and thus continues to be side-lined between its 55- and 200-day simple moving averages (SMA) at $1.0912 to $1.0846.
Further sideways trading is at hand for now but a rise above this week’s $1.0932 high may take the cross towards the 5 and 11 January highs at $1.0998 to $1.1001.
A drop through the 200-day SMA would have this week’s low at $1.0822 in sight, though.
EUR/GBP tries to stabilize above near five month low
EUR/GBP decline from its £0.8714 December high has taken it to Wednesday’s £0.8536 low amid diverging eurozone and UK PMI data, the former coming in weaker-than-expected while the latter surprised to the upside.
A fall through £0.8536 would put the September low at £0.8524 on the plate, below which more significant support can be spotted between the June-to-August lows at £0.8519 to £0.8493.
A minor advance above Wednesday’s £0.8563 Doji high would eye the December-to-January downtrend line at £0.8576 which is likely to cap.
USD/CNH drops on stimulus package hopes
The surprise announcement late on Wednesday by the People’s Bank of China to reduce banks’ reserve ratios by 50 basis points next month in a bid to boost liquidity increased volatility in the USD/CNH pair.
The currency pair recovered from Wednesday’s two-week low at CN¥7.1414 and is flirting with the 55-day SMA at CN¥7.1722.
Resistance above the 55-day SMA at CN¥7.1722 is seen at Wednesday’s CN¥7.1797 high ahead of the 200-day SMA at CN¥7.1922. A slip through Wednesday’s CN¥7.1414 low could lead to the 5 January low at CN¥7.1409 being reached below which further potential support sits at the CN¥7.1124 November low.
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