EUR/USD and EUR/JPY rally while EUR/GBP slides
Outlook on EUR/USD, EUR/GBP and EUR/JPY as Eurozone sinks into a recession.
EUR/USD continues to trade in a low volatility trading band
EUR/USD rallied on weaker-than-expected jobless claims in the US which led to hopes that the Federal Reserve (Fed) will opt to leave its hiking campaign on pause for longer and pushed the greenback lower.
Last Friday’s high at $1.0779 has thus been exceeded with the 22 May high at $1.0831 representing a possible upside target for next week when both the Fed and European Central Bank (ECB) will have their monetary policy meetings.
Potential support sits at the 30 May high at $1.0747 and at Tuesday’s $1.0733 high.
EUR/GBP slips back to its five-month low at £0.8568 as Eurozone enters a recession
EUR/GBP’s slide to levels last traded in December of last year, to last week’s £0.8568 low, happens as the Eurozone has entered a technical recession. Gross domestic product (GDP) fell by a revised 0.1% in the first quarter (Q1) of 2023 and the final three months of 2022, showing two consecutive quarters of negative growth.
Major support remains to be seen between the September-to-December lows at £0.8572 to £0.8548 and may hold once more. If not, the £0.85 mark would be next in sight.
Immediate downside pressure should be maintained while Thursday’s high at £0.8614 isn’t overcome.
UR/JPY resumes its ascent
EUR/JPY’s rise above Monday’s ¥150.20 high points towards a resumption of the currency pair’s uptrend despite the Eurozone sinking into a recession. The move higher is probably driven by further ECB rate hike expectations while the Bank of Japan (BoJ) pursues its ultra-loose monetary policy stance.
The May-to-June resistance line at ¥150.82 represents the first upside target. If overcome, the early and late-May highs at ¥151.07 to ¥151.61 will be in view.
This bullish forecast will remain valid as long as the current June lows at ¥148.64 to ¥148.60 hold on a daily chart closing basis.
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