EUR/USD, GBP/USD rally while USD/JPY stabilizes post BoJ minutes
Outlook on EUR/USD, GBP/USD and USD/JPY as US rate cycle peak may have been reached and as US yields slide.
EUR/USD rally has further to go
EUR/USD's strong rally on softer US employment data out of Friday is expected to continue as German factory orders beat forecasts and as the US Federal Reserve (Fed) is no longer expected to hike its rates one last time in this cycle which increases the odds of a soft landing in the US.
The rise above the $1.0736 late-September high puts the 200-day simple moving average (SMA) at $1.0808 on the cards, together with the $1.0834 July low.
Potential slips should find support around the $1.0695 late-October high below which meanders the 55-day SMA at $1.0654. While above it, upside pressure should remain in play.
GBP/USD confirmed technical bottoming formation
Last week’s GBP/USD rally and daily chart close above its $1.2337 mid-October high as markets priced in no more Fed rate hikes in this cycle and expect a soft landing in the US economy has confirmed a technical bottoming formation for the cross.
The 200-day SMA at $1.2435 represents the next upside target ahead of the 11 September high at $1.2548.
Slips may find support between the mid-October high and the 55-day SMA at $1.2337 to $1.2333.
USD/JPY stabilizes as BoJ continues monetary easing
USD/JPY has come off last week’s 33-year high at ¥151.73 as the Bank of Japan (BoJ) in its monetary policy minutes redefined its 1% long-term interest rate as a loose "upper bound" rather than a rigid cap and removed its pledge to guard the level. Since July, the long-term interest rate has been capped at 1%, an increase over the previous cap of 0.5%.
The July-to-November tentative uptrend line at ¥149.40 currently underpins the cross, together with the late-October low at ¥148.81. Were this level to give way, at least a minor top would be formed with the 55-day SMA at ¥148.40 being in sight.
Minor resistance above the psychological ¥150.00 mark can be found at the October 2022 peak at ¥150.94.
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.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
