EUR/USD, EUR/GBP and USD/JPY stabilise ahead of US CPI data release on Tuesday
Outlook on EUR/USD, EUR/GBP and USD/JPY in quiet trading.
EUR/USD dips to one-month low but tries to recover
EUR/USD's swift sell-off from its $1.1033 early-February high has taken it to a one-month low below last week’s $1.067 low amid an appreciating US dollar, pushed upwards by the prospect of still higher US interest rates being seen.
Last week’s attempt of a minor recovery to $1.079 has been followed by further weakness in the currency pair as the US University of Michigan consumer sentiment on Friday rallied to a thirteen-month high of 66.4 in February of 2023, from 64.9 in January, beating market expectations of 65. The cross has thus for the first time since early November slipped below the 55-day simple moving average (SMA) at $1.069 and eyes the early-December high at $1.0595 and the $1.0574 mid-December low.
While the bullish reversal takes EUR/USD above Thursday’s high at $1.079, further downside remains in store. Below this levels lies the previous $1.0715 to $1.0766 support zone, now because of inverse polarity resistance area, made up of the mid- to late-December highs and mid-January low.
EUR/GBP tries to stabilise after five consecutive days of losses
EUR/GBP’s five-day slide from its early-February high at £0.8978 has taken it to last week’s low at £0.8824 from which it is trying to recover, having last week narrowly avoided a recession in the UK as Q4 preliminary gross domestic product (GDP) came in unchanged month-on-month (MoM).
The cross now trades back around its 25 January £0.8852 high and may revisit the £0.8877 late-December high, above which lies the £0.8897 January peak, both of which are expected to act as resistance, should they be reached.
Support below last week’s low at £0.8824 comes in along the January-to-February support line at £0.8822 and then at the 9 January low at £0.8769.
USD/JPY bounces off last week’s low on surprise new BoJ governor nomination
USD/JPY’s slip to a one-week low at ¥129.80 on the back of the surprise nomination of Kazuo Ueda as the next Bank of Japan (BoJ) governor, has been followed by a bullish Hammer candlestick reversal and a rise earlier today towards the 55-day SMA at ¥132.49 ahead of Tuesday’s widely anticipated US consumer price index (CPI) data release.
While the moving average, and more importantly the current February high at ¥132.90 cap, another down leg may be formed. A rise above ¥132.90 would put the major ¥133.63-to-¥134.77 resistance zone on the cards, however. It contains the early-December low and late-December as well as January highs. While it isn’t overcome, the medium-term downtrend will remain in play.
Minor support can now be seen at the 24 January high at ¥131.12.
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