Dollar strength lifts USD/JPY but hits EUR/USD and GBP/USD
The brief rebound in risk assets is faltering, and as a result the dollar is strengthening once again.
EUR/USD bounce runs out of steam
EUR/USD's gains have stalled, with the price now edging back below $1.05 as the recovery in risk appetite begins to weaken. Along with stocks, EUR/USD had made headway over the course of last week and into this week, but once again growth and inflation fears are coming into play.
This has the effect of strengthening the US dollar once again, and suggests that we could see EUR/USD roll over and head down once again with the low stochastic readings currently in evidence indicating the strength of the downtrend.
Fresh declines now target $1.04 once again, and then to last week’s low at $1.036. A more bullish view requires a recovery above the highs of the past week around $1.0585.
GBP/USD teeters on edge of fresh declines
It is a similar story with GBP/USD. The pound rallied against the dollar last week, but the gains have stalled and now the price has slipped back from yesterday’s highs. Once again the greenback appears to be in the ascendant.
A resumption of the downward move targets last week’s low at $1.194, which was the lowest level since March 2020. From here the 2020 lows around $1.1435 come into play.
Buyers will want to see the price rally above $1.235 to reverse the bearish view.
USD/JPY hits fresh multi-decade high
The lack of any intervention from the Bank of Japan (BoJ) has emboldened the dollar bulls and pushed the USD/JPY to a new 24-year high.
Once again bullish momentum has asserted itself, and we look for the pair to make further upside headway, backed by high stochastic readings that indicate the strength of the move higher.
At present there is little sign of a reversal, and the bulls look to be firmly in charge. The 1998 high at ¥146.75 is the next big level to watch.
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