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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.

USD/JPY continues to slide while EUR/USD and EUR/GBP are capped

USD/JPY looks short-term toppish while EUR/USD and EUR/GBP are capped by resistance.

Pound Source: Bloomberg

EUR/USD continues to be side-lined below resistance

EUR/USD continues to hover below the 55-day simple moving average (SMA) at $1.0627 despite the Federal Reserve (Fed) Chair, Jerome Powell, in a testimony to Congress mentioning the possibility of a recession in the US and that his commitment to bringing down price increases is ‘unconditional’.

Wednesday’s intraday high at $1.0605 was only marginally made above the $1.0601 mid-June high but as long as Wednesday’s low at $1.047 underpins, another attempt to break through the minor $1.0601 to $1.0627 resistance zone is likely to unfold. If so, the four-month downtrend line at $1.0681 would be eyed.

Potential slips below Wednesday’s low at $1.047 could lead to the 17 June low at $1.0445 being revisited. Below it major support continues to sit at the $1.036 to $1.035 May and current June lows. Failure at $1.035 would bring parity to the fore.

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

EUR/GBP formed a minor top at £0.8641

EUR/GBP briefly overcame its £0.8618 May high and rose to £0.8641 on Thursday before coming off again as the UK is plagued by 40-year high inflation amid the country’s largest ongoing rail strike in 30 years.

Below the 21 June low at £0.8569, the three-month uptrend line can be spotted at £0.8548 and represents an immediate downside target.

Resistance above the £0.8618 to £0.8641 zone can only be seen at the currency pair’s one-year high at £0.8721 and the 200-week SMA at £0.8723.

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

USD/JPY comes further off its near 24-year high

USD/JPY is continuing to come off its ¥136.71 near 24-year high as the US dollar is depreciating slightly and the Japanese yen is benefitting from weaker oil prices, given that Japan is a big net importer, and as the core consumer price index in Japan increased to 2.1% in May year-on-year and thus exceeds the Bank of Japan’s (BoJ) target for the second month in a row.

Negative divergence on the daily 9-period relative strength index (RSI) - which made a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart earlier this week - led to the current minor countertrend move with the cross approaching its one-month support line at ¥133.60.

While the mid-June low at ¥131.50 holds, however, the medium-term uptrend remains valid.

Only a currently unexpected rise and daily chart close above this week’s multi-decade high at ¥136.71 would engage the minor psychological ¥140.00 barrier and then the June 1991 peak at ¥142.80.

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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