Dollar strength lifts USD/JPY back to July highs while EUR/USD and GBP/USD remain under pressure
Renewed USD strength has lifted USD/JPY and put severe pressure on EUR/USD and GBP/USD.
EUR/USD pushed lower by dollar strength
After the failed rally on Thursday following the consumer price index (CPI) figures, Friday’s hotter producer price index (PPI) figures put the EUR/USD on the back foot, pushing it back below the 50-day simple moving average (SMA).
For the moment, the bulls have managed to defend the 100-day SMA and the $1.092 level, avoiding a deeper pullback for the time being. This still leaves open the possibility of a renewed move higher and a close above $1.103 that might yet see a higher low created.
A close below $1.09 would signal further declines towards the June lows around $1.0835, and then down to the 200-day SMA at $1.078.
GBP/USD struggles after US inflation data
Here too the GBP/USD has failed to hold on to the bullish view that had seemed to be playing out last week.
A stronger dollar has brought the pair back to the late July low, and buyers will now need a solid recovery back above $1.275 to rebuild a view of a higher low. This might then allow for a move back to the July highs.
A close back below $1.26 would see the price drop below the late July and late June lows, and also put it below the 100-day SMA. This would put a further dent in the broader uptrend, and perhaps open the way to the May lows around $1.234.
USD/JPY back at July highs
The recovery of the July losses is now complete. The USD/JPY returned to the ¥145.00 area on Friday following the stronger PPI figures.
This gave the US dollar a lift and set the seal on the rebound from ¥138.00 of early July. The last time the pair reached these highs was in early July, and this brought talk of intervention in FX markets by the Japanese finance ministry. That risk still remains, but the bulls do appear to have the October 2022 highs at ¥151.94 in their sights.
There is little sign of any bearish price action at present, but a close back below ¥144.00 might suggest a period of consolidation is ahead.
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