USD/JPY continues to slide while EUR/USD and EUR/GBP are capped

EUR/USD continues to be side-lined below resistance

EUR/USD continues to hover below the 55-day simple moving average (SMA) at $1.0627 despite the Federal Reserve (Fed) Chair, Jerome Powell, in a testimony to Congress mentioning the possibility of a recession in the US and that his commitment to bringing down price increases is ‘unconditional’.

Wednesday’s intraday high at $1.0605 was only marginally made above the $1.0601 mid-June high but as long as Wednesday’s low at $1.047 underpins, another attempt to break through the minor $1.0601 to $1.0627 resistance zone is likely to unfold. If so, the four-month downtrend line at $1.0681 would be eyed.

Potential slips below Wednesday’s low at $1.047 could lead to the 17 June low at $1.0445 being revisited. Below it major support continues to sit at the $1.036 to $1.035 May and current June lows. Failure at $1.035 would bring parity to the fore.

EUR/GBP formed a minor top at £0.8641

EUR/GBP briefly overcame its £0.8618 May high and rose to £0.8641 on Thursday before coming off again as the UK is plagued by 40-year high inflation amid the country’s largest ongoing rail strike in 30 years.

Below the 21 June low at £0.8569, the three-month uptrend line can be spotted at £0.8548 and represents an immediate downside target.

Resistance above the £0.8618 to £0.8641 zone can only be seen at the currency pair’s one-year high at £0.8721 and the 200-week SMA at £0.8723.

USD/JPY comes further off its near 24-year high

USD/JPY is continuing to come off its ¥136.71 near 24-year high as the US dollar is depreciating slightly and the Japanese yen is benefitting from weaker oil prices, given that Japan is a big net importer, and as the core consumer price index in Japan increased to 2.1% in May year-on-year and thus exceeds the Bank of Japan’s (BoJ) target for the second month in a row.

Negative divergence on the daily 9-period relative strength index (RSI) - which made a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart earlier this week - led to the current minor countertrend move with the cross approaching its one-month support line at ¥133.60.

While the mid-June low at ¥131.50 holds, however, the medium-term uptrend remains valid.

Only a currently unexpected rise and daily chart close above this week’s multi-decade high at ¥136.71 would engage the minor psychological ¥140.00 barrier and then the June 1991 peak at ¥142.80.