Dollar strength weighs on EUR/USD and GBP/USD but boosts USD/JPY
The greenback continues to move higher, with the downtrends in EUR/USD and GBP/USD looking set to resume and USD/JPY’s bounce still gathering strength.
EUR/USD clings on near $1.20
EUR/USD has been insistent on holding near $1.20 over the past month. The short-lived rally from the July-Low below parity then turned into consolidation, with no sign as yet that a bigger move either higher or lower is in progress.
For now, the downtrend of the past year and more remains firmly intact. Thus, the potential for this consolidation to be a lower high still remains strong. A fresh turn lower targets parity and then $0.9952.
Gains have stalled below $1.027 over the last month, with sellers holding the price down. A move above this level brings the 50-day simple moving average (SMA) currently $1.0354 and then the June high at $1.06 into play as upside targets.
GBP/USD heads lower again
The peak at the beginning of August for GBP/USD at $1.208 marked the end of the July bounce. While so far the declines since then have been modest, it does look like a new lower high has been created and that the downtrend has reasserted itself.
Additional declines will target $1.18 and $1.175, the lows from mid-July, and a drop below here will create a new lower low.
Buyers have been unable to hold the price above the 50-day SMA over the past week, so a rally above this (currently $1.206) and then above $1.218 would be needed to reverse the growing bearish view.
USD/JPY holds around 50-day SMA
The jobs report last week helped to bolster USD/JPY, but the pair had been moving higher in any case from the beginning of August.
The uptrend here is still in place, and the drop in July, which pushed the price to a two-month low, provided the first real dip since May, if not earlier. Having returned to ¥131.00 and the 100-day SMA, the price has bounced, and for now we look for a continued move higher that will target ¥139.00.
A reversal below ¥131.00 would be needed to reverse the continued bullish view here.
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