Can the dollar regain lost ground across EUR/USD, GBP/USD and USD/JPY?
Can the dollar regain lost ground after recent losses across EUR/USD, GBP/USD and USD/JPY.
EUR/USD pushes through resistance to complete double bottom
EUR/USD has seen sharp gains of late, with markets seeking to reprice the dollar in anticipation of a less hawkish approach from the Federal Reserve (Fed) given concerns in the banking sector.
However, it is also worthwhile noting that there is a possibility that we will see a similar approach at the European Central Bank’s (ECB) this week, with markets still undecided as to whether it will be a 25 or 50 basis point (bp) hike tomorrow. For now, the price has rallied up through the $1.0691 resistance level, completing a double bottom formation that could signal further upside to come.
With that in mind, further upside looks likely. That being said, the strength of this recent move does bring the potential for a retracement, with a break below $1.065 signalling such a pullback coming into play.
GBP/USD rallies through trendline resistance
GBP/USD has also been on the rise, with the pair push through trendline resistance to establish a new one-month high yesterday.
That brings expectations of further upside, although todays UK budget release could bring volatility for the pair.
With the price consolidating this morning, there is a chance we see the pair retrace some of its recent gains. A break below $1.2046 would signal a significant pullback coming into play. Until then, this current pause looks to be a precursor for another leg higher.
USD/JPY rally looks likely to fail
USD/JPY (大口） has been attempting to regain lost ground overnight, with markets reacting to the latest Bank of Japan (BoJ) minutes which saw the committee discuss further tweaks to the yield curve control policy. With Kuroda on the way out, there is still an element of uncertainty over how things will develop in the face of rising Japanese inflation.
For today, the current USD/JPY rally looks at risk of turning lower before long, with the recent decline looking to signal the continuation of the bearish trend seen in quarter four (Q4) of 2022.
With that in mind, watch out for resistance around the Fibonacci levels, where the price has currently pushed up into the 50% threshold. We would ultimately need to regain the ¥137.91 level to resume the uptrend seen over the past month.
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