EUR/USD holds steady, as GBP/USD falls and USD/JPY makes headway

EUR/USD holds its ground

EUR/USD continues to drift lower, but for now continues to hold the $1.063 area, preventing a deeper fall for the time being. Much will depend on the European Central Bank (ECB) on Thursday, and whether they succeed in sounding more hawkish on monetary policy or not.

A move below $1.063 signals the beginning of a move back towards the lows of May towards $1.035, reviving the downtrend of the past year. A short-term bounce targets $1.0727 and then $1.0778, before moving on towards $1.088.

GBP/USD drops back from $1.26

GBP/USD's expectations of a renewed drop yesterday were confounded by the surge seen on Tuesday. Sterling seemed to shrug off concerns about the economy and the potential for more clashes with the EU over Northern Ireland, rallying from $1.243 towards $1.26.

Now we look to see if the pair can push on and move above $1.26, before heading on to challenge the late-May highs around $1.266. This sustained recovery has yet to really undermine the broader downtrend, with the mid-April highs near $1.304 and $1.314 still some way away.

USD/JPY climbs further

USD/JPY has leapt off the 50-day simple moving average (SMA), which it touched at the end of May, moving to a new higher high in a very short space of time. As yet there is no sign of a reversal in play, but if one were to occur then the ¥131.34 high from early May comes firmly into view.

Below this the 50-day SMA (currently ¥128.00) may offer support, and from there a move down brings the late May low at ¥126.60 into view. Early-2002’s high at ¥135.00 comes into play next, with the next big level after this taking us back into the 20th century and the 1998 high at ¥147.63.