EUR/USD, GBP/USD and USD/JPY expected to retain their trends despite recent risk-off move
Wider market worries have failed to dent the EUR/USD, GBP/USD, and USD/JPY trends, with inflation proving key.
EUR/USD heads higher after recent pullback
EUR/USD has been on the front-foot over the course of the past three months, with the pair driving upwards to reach a fresh nine-month high on Wednesday. However, much like the declines seen throughout European markets, that mid-point mark of the week brought a turn lower as deteriorating market sentiment brings greater demand for the dollar.
It is notable that we have seen this pair hold up relatively well despite shifting sentiment, with the gap between eurozone and US inflation providing less reason to expect a major shift into the dollar when monetary policy concerns resurface. As things stand, we are seeing the price turning upwards once again, with the bullish trend remaining in play. Whether we see a deeper retracement remains to be seen, but we are ultimately expecting to see another move higher unless the trend breaks with a break below $1.0483.
GBP/USD struggles at key resistance
GBP/USD has been leading the way this week, with the pair managing to drive higher throughout a period that has largely been dominated by market concerns. That strength looks to be coming into question today, with an unwelcome collapse in UK retail sales bringing sterling weakness.
Crucially, today’s decline comes from the key $1.2446 resistance level which is drawn from the mid-December peak. Whether this pullback produces anything substantiative remains to be seen, with a decline through $1.2313 required to bring expectations of a near-term pullback. As such, near-term sentiment will be dictated by whether we break $1.2313 or $1.2446.
USD/JPY turns upwards despite Japanese inflation rise
USD/JPY has been trading within a descending channel of late, with the rise in Japanese inflation coming as US prices reverse lower. That has brought a bearish reversal for the pair, with today’s national consumer price index (CPI) figure in Japan bringing a 400-year high in prices.
Nonetheless, we are instead seeing the pair push higher in early trade today. That looks to be providing a fresh retracement phase as we head towards the weekend. The ability to remain within this channel will be key, with a bearish outlook remaining in play until price breaks through trendline and ¥134.77 resistance.
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