EUR/GBP bottomed out while EUR/USD and USD/JPY await FOMC
USD/JPY levelled out, while the euro is struggling to make headway against both the dollar and the pound.
EUR/USD continues to weigh on channel support line, awaiting FOMC
EUR/USD keeps testing the two-month channel support line at $1.1292 which may still be slipped through ahead of key policy decisions from the Federal Open Market Committee (FOMC) tomorrow.
Together with the late December and early January lows at $1.1274 to $1.1272 the channel support line has held since late December. A fall through this support zone would put the mid-December low at $1.1222 as well as the November trough at $1.1186 on the map.
The downtrend remains firmly entrenched while the currency pair stays below the 16 January high at $1.1369 and, more importantly, the late November and December highs at $1.1383 to $1.1387.
EUR/GBP has formed a bottom and is likely to rise further still
Now that the November low and last week’s high at £0.8379 to £0.8381 have been exceeded, EUR/GBP is deemed to have formed a bottom at its year-to-date low at £0.8305. It was made right between the £0.8313 to £0.8277 December 2016, April 2017, December 2019 and February 2020 lows which represent key long-term support.
Given yesterday’s advance above the £0.8379 to £0.8381 resistance area and the brief rise above the early January £0.8419 high, the medium-term forecast has been neutralised with further short-term upside pressure remaining in the pipeline. The 55-day simple moving average (SMA) and mid-December low at £0.8436 to £0.8454 are now being eyed.
Slips, because of inverse polarity, should find support around previous resistance, namely in the £0.8381 to £0.8379 area. While the cross stays above yesterday’s low at £0.8351, further short-term upside is expected to be observed.
USD/JPY is to meander further above its ¥113.48 early January low ahead of FOMC
Yesterday USD/JPY probed but then bounced off its early January low at ¥113.48 with further short-term range trading above it likely to be seen ahead of tomorrow’s much anticipated US FOMC meeting.
A drop below yesterday’s ¥113.47 low would lead to the mid-December low at ¥113.14 being targeted, together with the late November low at ¥112.53.
Minor resistance continues to be seen along the 55-day SMA at ¥114.28 as well as along the one-month downtrend line at ¥114.38. The next higher ¥115.06 mid-January high and the November peak at ¥115.52 would need to be exceeded for the still bearish outlook to be invalidated.
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