EUR/USD and USD/JPY to consolidate last week’s strong gains while EUR/GBP range trades
Outlook on EUR/USD, USD/JPY and EUR/GBP post weaker-than-expected US inflation print.
EUR/USD consolidates post softer US inflation data rally
Last week’s swift EUR/USD advance due to softer than expected US consumer price index (CPI) data took it to $1.0364, close to the $1.0368 August peak, before consolidating around the $1.03 mark as Federal Reserve Governor Christopher Waller warned investors against getting too optimistic over one inflation report.
He also said that the US Federal Reserve (Fed) 'still got ways to go' with interest rate hikes whilst acknowledging that the Fed may slow the pace of rate increases in the coming meetings. Since the cross has risen by over 6% since early November it wouldn’t be surprising if a few days of consolidation were to be witnessed this week.
Support comes in at the $1.0198 September peak whereas resistance above the $1.0368 August high can be spotted along the 200-day simple moving average (SMA) at $1.0435.
EUR/GBP trades sideways between £0.8828 and £0.8691
EUR/GBP’s advance towards its £0.8867 mid-October high amid weaker than expected UK housing data last week has paused and taken the cross back towards the 55-day SMA at £0.872 around which it is consolidating.
The eventual break out of the current £0.8828 to £0.8691 trading range is likely to determine the ensuing trend with a rise above Wednesday’s £0.8828 high pushing the 26 and 28 September lows at £0.8853 as well as the October peak at £0.8867 to the fore.
Support below the November support line at £0.873 and the 55-day SMA at £0.872 can be spotted at the 7 and 10 November lows at £0.8701 to £0.8691. Further down lies the early October low at £0.8649.
USD/JPY drops to 2,5 month lows
Last week’s USD/JPY slip through its ¥145.11 late October low led to a swift 4.5% drop in the exchange rate to ¥138.46, a 2,5 month low, amid a weaker than expected US October CPI print of 7.7% versus an expected 8.1%.
Short term, some consolidation around the ¥140.00 mark is likely to be seen with first resistance being encountered around the post currency intervention ¥145.35 late September low. Further minor resistance can be found at the ¥141.51 9 September low.
Were last week’s low at ¥138.46 to give way, however, the 23 August high at ¥137.71 would be eyed, a fall through which could lead to the early August high at ¥135.58 being back in the frame. Further down meanders the 200-day SMA at ¥132.88.
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