EUR/USD and EUR/GBP stabilise while USD/JPY rises on US debt ceiling optimism
Outlook on EUR/USD, EUR/GBP and USD/JPY ahead of Tuesday’s US debt ceiling discussions.
EUR/USD tries to stabilise ahead of minor support at $1.0832
EUR/USD’s swift descent over the past week or so seems to have found temporary support along the 55-day simple moving average (SMA) at $1.0854 ahead of Tuesday’s meeting between US President Biden and House Speaker Kevin McCarthy and other congressional leaders to discuss budget negotiations to avoid a default.
The cross so far seems to hold above its 10 April low at $1.0832, a drop through which would likely lead to the mid-February high at $1.0804 being revisited.
Further potential support can be spotted around the early April low at $1.0789 while resistance sits between the 23 March high and 2 May low at $1.0929 to $1.0943. While this resistance zone caps, downside pressure is expected to retain the upper hand.
EUR/GBP’s recovery from its five-month low is ongoing
EUR/GBP’s drop to levels last traded in December of last year has been followed by a bounce off last week’s low at £0.8662 which was thwarted by the Bank of England’s (BoE) twelfth consecutive rate hike to 4.5%. The cross thus remained below its 200-day SMA at £0.8741 which may this week act as resistance as well.
Above it the late-February low at £0.8755 may also cap any attempt of a move higher, together with the early-May low at £0.876.
A slip through Friday’s low at $0.8694 may lead to last week’s 2023 low at £0.8662 being revisited.
USD/JPY eyes the ¥137.77 to ¥137.91 region
Last week’s rally in the USD/JPY exchange rate is expected to have legs and may take it to the 200-day SMA at ¥137.01 above which beckon the March and early-May highs at ¥137.77 to ¥137.91.
Potential minor retracements lower should find at least interim support between last Wednesday’s high and the mid-March and mid-April highs at ¥135.47 to ¥135.11.
The medium-term March-to-May uptrend will remain valid while the late-April low at ¥133.02 underpins on a daily chart closing basis.
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