Fading dollar sees rising demand of EUR/USD and GBP/USD, as USD/JPY reverses lower
Dollar gains stifled, with EUR/USD and GBP/USD regaining lost ground as USD/JPY rolls over once again
EUR/USD continues to grind higher
EUR/USD has been grinding higher since Tuesday’s lows, with the dollar resurgence coming into question thanks to a more stable market environment. Except that has not been the case over the past 24-hours, with a sharp decline in US indices failing to really bring a proportionately significant move for the dollar.
Instead, the pullback for EUR/USD gave us another short-term higher low, with price remaining within its current consolidation phase. With trendline support down below, the pair would need to break through trendline and $1.0669 support to bring the bearish view back into play. Until then, another short-term move higher looks likely here.
GBP/USD on the rise as the UK avoids recession
GBP/USD has also enjoyed a period of upside since Friday’s US jobs fuelled dollar decline, with the pair attempting to regain ground ever since. This morning has seen the UK economy come into focus thanks to a data docket that included quarter four (Q4) gross domestic product (GDP) (0.1%), December GDP (-0.5%), industrial production (0.3%), and manufacturing production (0%).
The common theme is relief that the UK has narrowly avoided a recession, although the country does face the prospect of growth being around or below zero for much of 2023. With GBP/USD on the rise this morning, it makes sense to expect further upside to build on the recent 76.4% Fibonacci rebound. To the downside, we would ultimately require a break below $1.1841 to complete a bearish double top formation to bring a more reliable sell signal.
USD/JPY reverses lower after Fibonacci pullback
USD/JPY has turned lower after the recent upside break into 76.4% Fibonacci resistance, bringing the wider bearish trend back into play. A look at the downtrend in place over the past three months does highlight how the recent rebound through trendline resistance had the potential to simply represent a deeper retracement, with a break up through ¥134.77 required to bring this downtrend to an end.
Until that happens, the bears look likely to remain in charge as rising Japanese inflation shifts the tightening onus to the Bank of Japan (BoJ) as the Federal Reserve (Fed) approaches its terminal rate.
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