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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

EUR/USD back above parity as USD/JPY comes off 24-year high while EUR/GBP holds

EUR/USD recovers and USD/JPY slips as traders reassess Fed policy tightening while EUR/GBP is running out of steam.

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EUR/USD trades back above parity on reassessed Fed outlook

EUR/USD is recovering from its near 20-year low it briefly made below parity last week as traders reassess the Federal Reserve’s (Fed) tightening path and move away from expectations of a 100-basis point (bp) rate hike at the next meeting. This followed comments by Atlanta and St Louis Fed Presidents Raphael Bostic and James Bullard on Friday which mentioned a second month in a row 75-bp hike was in the pipeline.

Last Wednesday’s high at $1.0122 is likely to be revisited, a rise above which would engage the $1.02 region. Much more significant resistance can be found in the $1.034 to $1.036 zone which consists of the December 2016 and January 2017 as well as the May and June 2022 lows.

Were a renewed descent to take the cross below last week’s low at just above $0.995, however, the $0.9698 to $0.9593 support area would be targeted. It is comprised of the June 2000 and February 2001 highs and the September 2002 low.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

EUR/GBP trades in the £0.85 region

EUR/GBP is trading back around its £0.8486 early June low following last week’s brief foray to £0.8403 as the Euro strongly depreciated and dropped below parity versus the US dollar, the first time in nearly 20 years.

Minor resistance above Friday’s high at £0.8513 can be spotted around the 55-day simple moving average (SMA) at £0.8533 and also between the 24 and 30 June lows at £0.8551 to £0.8561. Further up sit the late May and early June highs at £0.8588 to £0.8592.

Below Friday’s low at £0.8465 meanders the 200-day SMA at £0.8443 which is likely to act as support, if retested.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

USD/JPY consolidates below its fresh 24-year highs

Last week USD/JPY traded in fresh 24-year highs whilst trying to reach the ¥140.00 mark before consolidating slightly with US retail sales coming in better than expected for June, while consumer inflation expectations softened in July.

With Japan enjoying a public holiday today, the cross seems to be slipping back towards last Monday’s high at ¥137.75 and its May-to-July uptrend line at ¥137.08. Further potential support comes in at the late June high at ¥137.00.

Above the ¥140.00 region lie two medium-term upside targets, one at the April 1991 high at ¥142.80 and the other at the July 1998 peak at ¥147.63. These may be reached on expectations that the Fed continues to pursue its aggressive tightening policy while the Bank of Japan (BoJ) sticks to its dovish stance.

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

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