EUR/USD slips, USD/JPY rises on US dollar safe haven flows while EUR/GBP drops to two-week low
Outlook on EUR/USD, USD/JPY and EUR/GBP amid rising China Covid-19 cases.
EUR/USD slips on safe-haven flows into the greenback
EUR/USD keeled over last week and slid back to its November uptrend line at $1.0261 on Monday morning as the US dollar appreciates on Covid-19 related concerns in China and acts as a safe haven currency for the third day in a row.
The one-month uptrend line may act as short-term support, but if slid through, would push the September high at $1.0198 to the fore.
Immediate resistance can be spotted at Thursday’s $1.0305 low, above which meanders the 200-day simple moving average (SMA) at $1.0409.
EUR/GBP tumbles to two-week lows
Last week’s slide in EUR/GBP is ongoing with the currency pair now trading in two-week lows ahead of Tuesday’s UK public sector net borrowing data release for October and Wednesday’s German and UK global manufacturing and services purchasing managers index (PMI) data for November.
The fall out of the recent £0.8828 to £0.8691 trading range is pointing to the early October low at £0.8649 soon being reached. Further down more solid support sits between the mid- and late October lows at £0.858 to £0.8572.
Minor resistance above the £0.8691 7 November low can be seen along the 55-day SMA at £0.8728 and also at the £0.8780 21 October high as well as at the £0.8828 current November peak, a currently unexpected rise above which would engage the 26 and 28 September lows at £0.8853 as well as the October peak at £0.8867.
USD/JPY continues to heave itself off its 2 ½ month low
USD/JPY’s over 9% rapid slide to last week’s ¥137.68 low is taking a breather with the cross trying to regain some of its losses ahead of the Bank of Japan’s (BoJ) year-on-year (YoY) Core consumer price index (CPI) data release for November which is expected to come in at 2.2% versus 2.0% in October.
Rising China Covid-19 cases and curfews have led to flight to safety flows into the US dollar which also pushed the exchange rate higher. Further consolidation above the minor psychological ¥140.00 mark is likely to be seen with first resistance being encountered around last week’s high at ¥140.80. Further minor resistance is tucked away at the ¥141.51 9 September low.
Potential slips should find support between the ¥140.00 mark and Thursday’s ¥138.88 trough. Were last week’s low at ¥137.68 to unexpectedly give way, the early-August high at ¥135.58 would be in focus. Further down meanders the 200-day SMA at ¥133.49.
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