EUR/USD, EUR/GBP slip on hawkish Fed minutes while USD/JPY confirms a bottom
Outlook on EUR/USD, EUR/GBP and USD/JPY post US Fed minutes.
EUR/USD slips further on hawkish Fed minutes
EUR/USD is seen to decline further as the US Federal Reserve (Fed) minutes showed that although most committee members voted for a 25-basis point (bp) rate hike at the February meeting, some favoured a 50-bp rate hike. However, the committee was unanimous on the need to keep raising rates, given the recent strong economic data, in order to push inflation down.
The US dollar benefitted from the Fed minutes with EUR/USD slipping to levels last traded in early January and approaching the $1.0595 early December high and the $1.0574 late December low.
The one-month resistance line at $1.0648 is expected to cap the upside on Thursday and as long as the 55-day simple moving average (SMA) at $1.0718 isn’t being exceeded, the February downtrend in EUR/USD is likely to continue.
EUR/GBP drops to near one-month low
Last week’s EUR/GBP rally ran out of steam at Friday’s £0.8928 high as the United Kingdom (UK) and European Union (EU) tried to hammer out a deal on how to resolve the Northern Ireland protocol but then keeled over and slid to this week’s current February low at £0.8784 below which lurks the £0.8763 late January low.
Failure there would push the £0.8722 mid-January low back to the fore. Resistance above the 55-day SMA at £0.8808 comes in along the breached December-to-February uptrend line which, because of inverse polarity has become a resistance line, at £0.884.
Above it sits minor resistance at the £0.8852 25 January high.
USD/JPY closes above key technical resistance zone
USD/JPY's bottoming formation has finally been confirmed by this week’s several daily closes above the ¥134.77 early January high on the back of hawkish Fed minutes.
Further upside is thus likely in store which could take the cross to the 200-day SMA at ¥137.02. Immediate upside pressure should be maintained while the last reaction low at Monday’s Doji low at ¥133.93 underpins on a daily chart closing basis.
Together with the ¥133.63 early December low it is expected to act as support. Should it be unexpectedly slipped through, though, the next lower ¥132.90 early February high may be revisited.
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