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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

​​​EUR/USD, EUR/GBP and USD/JPY take a breather as investors mull over outlook

​​Outlook on EUR/USD, EUR/GBP and USD/JPY amid hawkish Federal Reserve, strong ADP employment data and Japan narrowly avoiding a recession.

EUR Source: Bloomberg

​​​EUR/USD finds interim support around its February low

EUR/USD found support around its $1.0533 February low as the Federal Reserve (Fed) Chair Jerome Powell stuck to his hawkish tone in his testimony before the US House Financial Services Committee on Wednesday in which he said that the Fed is “prepared to increase the pace of interest rate hikes” if the data requires it but that no decision regarding the March committee meeting had been taken yet.

​Hawkish comments by the European Central Bank (ECB) President Christine Lagarde helped stabilise EUR/USD on Wednesday but a slip below the recent lows at $1.0533 to $1.0525 would push the $1.0484 to $1.0444 support zone, made up of the mid-November high, early-December and January lows, to the fore. It is expected to hold when first tested.

​Minor resistance in case of an advance above Wednesday’s high at $1.0573 being seen, comes in at the $1.0612 mid-February low.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

​EUR/GBP’s advance on a hawkish ECB remains intact

​EUR/GBP’s rise through its February-to-March downtrend line and above the early March high at £0.8896 on hawkish comments by several ECB committee members has so far taken it close to its £0.8928 mid-February high.

​Were it to be exceeded, the early-February peak at £0.8978 would be back in the frame, together with the minor psychological £0.900 mark.

Support comes in along the March uptrend line at £0.8889 and then at the breached two-month downtrend line, now because of inverse polarity support line, at £0.887. Further down sits the 25 January high at £0.8852.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

​USD/JPY struggles around the 200-day simple moving average

USD/JPY has so far risen to a three-month high at ¥137.91 before slipping back below its 200-day simple moving average (SMA) at ¥137.44 as Japan quarter four (Q4) gross domestic product (GDP) was revised lower to show no growth with the country narrowly avoiding a recession.

​Immediate support can be spotted along its two-month uptrend line at ¥136.28, ahead of its recent March lows at ¥135.37 to ¥135.26. While these underpin, an upside bias remains in play.

​Should a slip through ¥135.26 be seen, however, the more significant ¥134.77 January high and ¥133.63 early-December low should offer support. A continued advance and rise above Wednesday’s high at ¥137.91 would engage the December high at ¥138.17.

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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