EUR/USD, EUR/GBP and AUD/USD try to recover
Outlook on EUR/USD, EUR/GBP and AUD/USD.
EUR/USD dips to one-month low but tries to recover
EUR/USD's retest of the $1.0736 to $1.0766 resistance zone, up of the mid- to late December highs and mid-January low, failed at $1.0804 on Tuesday with the cross heading back down towards its current February low at $1.0656 despite hawkish comments by the European Central Bank (ECB) President Christine Lagarde, mentioning a further 50 basis point (bp) rate hike being in the pipeline.
Below $1.0656 await the early-December high at $1.0595 and the $1.0574 mid-December low which will remain in focus while this week’s high at $1.0804 caps on a daily chart closing basis.
Minor resistance below $1.0804 is seen between the early-December high and the mid-January low at $1.0736 to $1.0766.
EUR/GBP rallies on slowing UK inflation after seven consecutive days of losses
EUR/GBP's seven-day slide from its early-February high at £0.8978 has taken it to Tuesday’s low at £0.8804 before it rallied all the way back to its £0.8897 January peak on weaker-than-expected UK inflation data.
Consumer Price Inflation (CPI) fell to 10.1% year-on-year (YoY) in January, below expectations of 10.3% and 10.5% in December and by 0.6% month-on-month (MoM), the sharpest monthly decline since January 2019. Core inflation slid to 5.8%, below expectations of 6.2% YoY and 6.3% in the previous month.
A rise above the £0.8897 January peak and Wednesday’s high at £0.8902 may lead to the £0.8915 6 February low being revisited, above which towers the early-February high at £0.8978. Slips should find support between the £0.8877 late-December high and the 25 January £0.8852 high. Further support can be spotted at last week’s low at £0.8824 and this week’s low at £0.8804.
AUD/USD drops on highest unemployment rate in eight months
AUD/USD first tumbled to its 55-day simple moving average (SMA) at $0.6875 as Australia’s seasonally adjusted unemployment rate unexpectedly rose to 3.7% in January versus an expected 3.5% as was the case for its December near five-decade low. The cross then recovered, though.
For now, AUD/USD has managed to hold above its early-February low at $0.6956, a fall through which would lead to the 200-day SMA at $0.6807 being eyed. Minor resistance can be spotted at the $0.6983 late-January low.
Provided that this week’s high at $0.7029 caps, further downside is likely to be seen. If this level were to be exceeded on a daily chart closing basis, the mid-January high at $0.7063 would be back in sight, a rise above which would mean the continuation of the currency pair’s medium-term uptrend.
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