EUR/USD, GBP/USD, and USD/JPY in focus ahead of the Fed
The Fed look set to provide direction for EUR/USD, GBP/USD, and USD/JPY, with the dollar strength story having faded of late.
EUR/USD starts to roll over after recent consolidation
EUR/USD has been on the back foot over the course of the past 24-hours, with price falling back into a one-week low. The wider trend always highlighted the potential for a bearish reversal before long, and there is a chance that we are seeing that downtrend come back into play here.
A push up through the recent high of 1.0278 would signal a wider upward retracement coming into play. However, until that happens it looks likely that we will see the bears dominate as we move forward.
Pay close attention to the forthcoming Federal Open Market Commitee (FOMC) meeting, with the size of the hike and the outlook over growth and inflation likely to drive significant volatility for the US dollar.
GBP/USD grinds higher ahead of the Fed
GBP/USD has been moving gradually higher over the course of the past week, with price rising into a fresh three-week high yesterday.
There is a good chance that we do see further upside, with price having only managed to regain 50% of the original 1.2406-1.176 decline, that points towards upside targets at 1.2159 and 1.2254.
However, while we could see further short-term upside, the wider trend does highlight the potential for a bearish turn before long. As such, a break back below 1.189 level would bring a more bearish picture into play for a decline through 1.176.
USD/JPY regaining ground into Fed meeting
USD/JPY has enjoyed a positive week thus far, with price regaining ground after a sharp decline into a confluence of trendline and a 200-day simple moving average (SMA) support.
With the stochastic rolling over from overbought territory, there is a distinct chance that we see some short-term weakness come back into play before long.
However, a break back below the 135.32 level would be required to bring about expectations of a wider reversal for the pair. Until then, the recent bullish trend does still remain intact, singalling the potential for a continuation of this recent move higher even if we do see a short-term pullback.
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