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​​EUR/USD, EUR/JPY and USD/JPY outlook ahead of plethora of central bank meetings

​​Outlook on EUR/USD, EUR/JPY and USD/JPY ahead of FOMC and ECB rate decisions.

EUR Source: Bloomberg

​​​EUR/USD muted ahead of Fed and ECB rate decisions

EUR/USD’s reversal off Wednesday’s four-month high at $1.1017 on softer eurozone inflation, which brought forward European Central Bank (ECB) rate cut expectations, took the cross to last week’s low at $1.0724.

It is now hovering above this low in low volume trading ahead of Wednesday’s Federal Open Market Committee (FOMC) and Thursday’s ECB meetings.

​A fall through $1.0724 would engage the 55-day simple moving average (SMA) and late October high at $1.0695 whereas a rise above Friday’s high at $1.08, Thursday’s high and the 200-day SMA at $1.0817 to $1.0825. Further up the 22 November-low at $1.0853 may also act as resistance, were it to be reached at all.

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

​Sharp EUR/JPY drop is followed by a swift recovery rally

EUR/JPY’s sharp decline off its ¥164.30 November peak amid ECB rate cut expectations accelerated last week when the Bank of Japan (BoJ) Governor Kazuo Ueda’s hinted at ending the country’s negative interest-rate policy.

​Since then a swift reversal to the upside is taking the cross back up towards its late October-low at ¥157.70 despite a business survey index of large manufacturing firms in Japan hitting a two-year high.

Further up the steep November-to-December downtrend line at ¥158.98 should also act as resistance. Minor support is seen at Friday’s ¥156.09 high.

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

​USD/JPY resumes its ascent

USD/JPY’s sharp drop amid the BoJ talking about phasing out its massive stimulus next year has taken it to ¥141.63, to around the 200-day SMA at ¥142.34 which acted as support last week.

​Since then, a recovery rally has been underway with the two-month downtrend line and the 20 November low at ¥147.12 to ¥147.15 being within reach.

While the next higher reaction high on the daily chart at Wednesday’s ¥147.50 high isn’t overcome, overall downside pressure retains the upper hand.

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

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