EUR/USD, EUR/GBP remain under pressure while USD/JPY trades in near 20-year highs
EUR/USD and EUR/GBP flirt with last week’s lows as worries about the outcome of the French presidential election weigh on the Euro while USD/JPY is trading at levels last seen in May 2002.
EUR/USD drops towards the $1.0727 April 2020 low on firmer Dollar
EUR/USD revisits last week’s low at $1.0758, having slid through its $1.0806 early March low, with the April 2020 trough at $1.0727 being next in line.
The US Dollar continues to appreciate amid escalating worries of further lockdowns in China, Russia apparently beginning the second phase of its advance in the Donbas region of Ukraine and mounting signs of more interest rate hikes being in the pipeline globally. This contrasts with ongoing Euro weakness due to the war in Ukraine and worries about the outcome of this weekend’s second round of France’s presidential election in which the incumbent Emmanuel Macron is battling it out with his right-wing rival Marine Le Pen.
The trend in EUR/USD will remain immediately bearish while the cross stays below the late March low and last week’s high at $1.0933 to $1.0945 with the March 2020 low at $1.0638 representing a downside target for the weeks ahead. Major resistance remains to be seen between the January low and March high at $1.1122 to $1.1185. While the cross stays below this area, the long-term downtrend remains intact.
EUR/GBP’s bounce off last week’s low at £0.8250 looks vulnerable
EUR/GBP bounce off Thursday’s £0.825 low has been very tepid with the cross so far not even reaching the 23 March low at £0.8296 as the Euro remains under pressure amid heightened tensions in Eastern Ukraine and worries surrounding the second round of the French presidential elections.
Further minor resistance is found at the £0.8308 8 April low and at the £0.8322 late March low.
A fall through last week’s low at £0.825 would put the March trough at ££0.8203 on the map.
USD/JPY trades in near 20-year highs
USD/JPY is trading at levels last seen in May 2002, having practically closed higher every single day since the beginning of April, probably its longest losing streak in at least half a century , as traders continue to focus on the widening gap between US and Japanese interest rates.
Comments by the Federal Reserve Bank (Fed) of St. Louis President James Bullard which mentioned the possibility of 75 basis point (bp) rate hikes being seen in the US led to another surge higher in the USD/JPY cross with it gunning for the ¥135.18 January 2002 peak.
Good support can now be seen between the June 2015 and March 2022 highs at ¥125.85 to ¥125.10 which is unlikely to be revisited anytime soon, though, if the Bank of Japan’s (BOJ) keeps sticking to its dovish stance despite inflation hitting at 3-year highs.
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