EUR/USD declining and USD/JPY holding firm, while GBP/USD begins to show signs of a higher low
Dollar strength continues to hit EUR/USD, while USD/JPY is holding on to its recent gains. Meanwhile, the pound is showing signs of a recovery against the dollar.
EUR/USD still in full retreat
Losses continue in the pair EUR/USD, as the dollar gathers strength and expectations of a Federal Reserve rate hike in June continue to rise. While leaders in Washington have agreed the outline of a deal, a successful ratification is still uncertain.
Having fallen below trendline support and below the 50- and 100-day simple moving averages (SMAs), the price now targets the March lows around $1.053. Below this the 200-day SMA comes into view.
The sellers have had it all their own way since the beginning of the month, with intraday lower highs signalling continued bearish pressure. It would need a move back above $1.082 to begin to suggest that a revival is in play.
GBP/USD begins to edge higher
There has been some stabilisation here, in GBP/USD, with the price edging higher off last week’s lows.
A close above $1.24 would help to bolster the view that a higher low has been formed and that the cycle of declines from May’s high has run its course. This might then open the way to a renewed push to the highs of May around $1.266.
A failure to hold the gains from Friday might then open the way to further declines to the 100-day SMA and lower.
USD/JPY sits near seven-month high
The pair USD/JPY's strong run continues, as flows head back to the US dollar despite the debt ceiling crisis.
The pair has now risen to its highest level since November, and has enjoyed a powerful move higher. Some consolidation may now follow, but it would need a move back below ¥137.00 to provide an indication that the sellers are in control once again.
Additional upside targets the November 2022 high at ¥142.30.
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