EUR/USD tentatively holds at multi-year support while EUR/GBP and GBP/JPY also stabilise
EUR/USD tries to stabilise above its January 2017 low with EUR/GBP and GBP/JPY also holding ahead of this week’s UK unemployment, inflation, and retail sales data.
EUR/USD tries to stem its slide
Last week EUR/USD dropped to $1.035 amid worries of a looming recession and the interest rate differential between the European Central Bank’s (ECB) and the US Federal Reserve’s (Fed) monetary policies. The cross dropped to a level last seen in January 2017 and by over 15% from its 2021 Covid-19 pandemic peak, before levelling out.
The fact that the currency pair stabilised has probably come as no surprise to technical traders since multi-year key support seen between the March 2015, December 2016, and January 2017 lows at $1.0463 to $1.0341 is deemed to withstand the first test. Having said that, the downtrend remains firmly entrenched and as long as the early May high at $1.0642 isn’t overcome, the $1.035 to $1.0341 area is expected to eventually give way with the major psychological $1.00 mark, or parity, then being targeted.
Minor resistance above the 28 April low at $1.04723 comes in along the one-month resistance line at $1.05 and also at Thursday’s $1.0529 high.
EUR/GBP stabilises above 200-day simple moving average (SMA) ahead of UK data
EUR/GBP’s decline off last week’s £0.8618 high earlier today found support at £0.8472, not far above the 200-day SMA at £0.8446, ahead of this week’s UK unemployment, consumer price index (CPI) and retail sales data.
While the £0.8472 to £0.8446 support zone holds, a rise back towards the early and mid-May highs at £0.8591 to £0.8618 is on the cards.
Were this resistance area to be overcome, the September peak at £0.8658 and also the late May and July 2021 highs at £0.8669 to £0.8671 would be next in line.
GBP/JPY decline looks to have ended at last week’s low
The slide in GBP/JPY seems to have ended at last week’s ¥155.61 low ahead of this week’s unemployment, CPI and retail sales data releases.
From a technical point of view an Elliott Wave zig-zag correction, also called and a,b,c correction, may have ended at last week’s ¥155.61 low now that a brief rise above Friday’s ¥158.51 high has been seen. If so, a continued advance should eventually take the cross to above its April ¥168.43 peak.
For this scenario to become more probable a rise and daily chart close above the one-month downtrend line at ¥160.86 should ideally take place this week with the wave ‘b’ high at ¥164.25 representing the next upside target. A drop through the current May trough at ¥155.61 would invalidate the bullish technical set-up and probably provoke a resumption of the recent descent towards the December-to-May uptrend line at ¥152.46.
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