Dollar on the rise for EUR/USD, GBP/USD and USD/JPY
EUR/USD, GBP/USD and USD/JPY all see dollar strength after Trump’s Iran comments.
EUR/USD declines into SMA support
EUR/USD fell below the $1.1125 support level yesterday, in the latest leg lower within a week-long period of declines for the pair. However, we remain within a wider three-month uptrend, as highlighted on the four-hour chart.
Beyond that we have a long-term downtrend, which is highlighted on the weekly chart. With that in mind, the question is whether we are set for another leg higher to maintain this short-term uptrend, or whether we are selling off with a view to bringing that wider bearish trend back into play. With the price dropping back into a confluence of the 76.4% Fibonacci level and 200-hour simple moving average (SMA) support, there is a good chance we will turn higher from here. However, should we break below this support zone, we would need to see the pair decline below $1.1067 to negate this recent uptrend and bring the wider bearish picture into play.
GBP/USD eases back amid dollar strength
GBP/USD is falling towards a notable area of support, with recent gains proving short-lived. The failure to push through $1.3284 signals a worrying sign that these recent gains may not be sustained.
However, we need to see a break below $1.305 to highlight a strong likeliness of further short-term downside. Should that occur, watch out for the ascending trendline as the next level of support.
USD/JPY surges after recent sell-off
USD/JPY is rather predictably one of the biggest movers off the back of this recent US-Iran conflict. The decline below ¥108.42 and ¥108.23 signaled a likely end to the uptrend evident throughout November and December.
Thus, there is a good chance we will see another turn lower to build on that recent pullback. However, with the state of the market clearly having shifted in response to US President Donald Trump's appearance, there is a chance that the pullback seen over the past week is going to be the sum total of this period of weakness. As such, we would need to see a break through ¥109.70 to bring about a more confident bullish outlook for the pair. Until then, there is still a chance of turning lower in line with the wider bearish trend.
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