Dollar weakness ongoing, but unlikely to last for EUR/USD, GBP/USD and USD/JPY
The dollar has come under pressure over the past week, yet those countertrend moves look likely to resolve back the direction of the trend for EUR/USD, GBP/USD, and USD/JPY.
EUR/USD gaining ground within wider bearish trend
EUR/USD has been on the rise over the course of the week thus far, with the price pushing back into the 100-SMA (simple moving average) level. Crucially it is worthwhile noting that despite breaking from the intraday pattern of lower highs and lows, we are moving within a wider timeframe trend which thus points towards this current push higher being a retracement of the decline from 1.0615.
With that in mind, we are looking at the potential for the bears to come back into play around the 61.8-76.4% Fibonacci levels. The descending trendline also joins those key levels to provide a notable resistance zone. For now, we are seemingly finding support on the prior resistance level of 1.0221. As such, further upside could be around the corner, although such gains would simply push us closer towards the 1.0362-1.0458% resistance/reversal zone.
GBP/USD gains look unlikely to last
GBP/USD has similarly been regaining lost ground over the course of the past week, with the price rising back above the 1.20 threshold yesterday. Much like the previous pair, it makes sense to view this period of upside as a wider retracement of the 1.2406-1.1760 selloff.
As such, while we could see further short-term upside, it makes sense to expect the bears to come into play before long. To the upside, the 61.8-76.4% Fibonacci zone provides a key region for the price to turn lower if we reach it. This bearish outlook holds unless we see the price rise through the 1.2406 resistance level.
USD/JPY pullback brings buying opportunity
USD/JPY has seen the price drift lower over much of the past week, with the pair moving back into a confluence of the 76.40% Fibonacci and trendline support. The uptrend evident over recent months looks likely to remain in play here, as the wide gap in inflation and thus monetary policy helps bolster the case for further upside.
With that in mind, this latest pullback represents a buying opportunity for the pair. As such, bullish positions are favoured here, with the pair expected to gradually return back towards the highs seen last Thursday. A break below the 1.3647 swing-low would be required to bring about a more bearish outlook for the pair.
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