EUR/USD and USD/JPY struggle to move higher, but GBP/USD makes headway
FX markets are awaiting tonight’s Fed rate decision, though the pound has been able to make gains against the dollar.
EUR/USD decline pauses
EUR/USD has dropped back sharply over the past week, but there are some signs of stabilisation in early trading.
The price has halted its decline for now, after dropping around 250 points from the month high. If the price can continue to hold above $1.105 then a higher low may be created. Daily stochastics have dropped back to oversold levels, which may see some buying pressure develop. This might then allow the price to renew its move higher.
A drop back below $1.104 would negate this view and suggest more losses and a deeper retracement, towards the 50-day simple moving average (SMA).
GBP/USD looking to move higher
A sharp gain for GBP/USD yesterday seems to have created a higher low.
The price bounced off trendline support from the May lows, and has moved back to $1.29. This then could suggest a renewed move higher that could target the July highs once again, and potentially see a fresh higher high for the year.
Sellers will want to see a reversal back below $1.28 and below trendline support, in order to open the way to the 50-day SMA or lower.
USD/JPY recovery stalls
The rebound here with USD/JPY has suffered a sharp check, as pre-Federal Open Market Committee (FOMC) nervousness sets in.
The impressive gains from the July lows had culminated on Friday with a surge through the 50-day SMA, taking the price to its highest level in two weeks. A drop from this level has returned the price to the 50-day SMA. This might provide support, but a daily close below the 50-day moving average (MA) might indicate further weakness was likely.
Alternately, if the price can hold above the 50-day SMA and rally back above ¥141.00 then a more bullish view might emerge.
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