EUR/USD and EUR/GBP rise as USD/JPY weighs on support
EUR/USD and EUR/GBP benefit from a stronger Euro amid hawkish comments from the ECB’s President Lagarde while USD/JPY slips towards key support.
EUR/USD trades in one-month highs
EUR/USD’s advance from its mid-May $1.035 low has taken it to above its two-month downtrend line at $1.0555 and the early May high at $1.0642, following comments by the European Central Bank’s (ECB) President Christine Lagarde in which she essentially pre-committed to a 25 basis point (bp) hike in July and September.
An interim bottoming formation has thus been confirmed with the mid-April low at $1.0758 now being eyed. Another potential upside target is seen along the 55-day simple moving average (SMA) at $1.0788, near the 2022 downtrend line at $1.0849.
Minor support below last week’s high at $1.0607 is seen along the two-week support line at $1.0555 and at Friday’s $1.0533 low. Further minor support sits between the April and 6 May lows at $1.0483 to $1.0472.
EUR/GBP recovers from the 200-day simple moving average
EUR/GBP managed to stabilise above its two-month support line at £0.8425, ahead of Tuesday’s French, German and UK manufacturing and services purchasing managers’ index (PMI) releases for May.
The cross thus managed to recover from around the 200-day SMA at £0.8445 and is trading close to this week’s high at $0.8504. This level needs to be bettered for the late March high at £0.8512 to be back in focus. Further up lurks last Monday’s high at £0.8534.
Below the two-month support line the 55-day SMA can be found at £0.8407 and last week’s low at £0.8393 which, together with the early May low at £0.8368, remains key for the currency pair’s uptrend. If slipped through, the technical picture would become bearish again.
USD/JPY trades close to 4-week lows as Japan manufacturing growth eases to 3-month low
USD/JPY is trading at levels last seen at the end of April, close to its late April ¥126.95 low, as Japan’s manufacturing PMI declined to a 3-month low at 53.2 in May amid supply chain disruptions due to the war in Ukraine versus a revised 53.5 a month earlier.
This comes after Japan’s consumer prices rose by 2.5% year-on-year (YoY) in April last week, the most since October 2014, following a 1.2% gain in March. The April figure also marked the 8th straight month of annual inflation, with food prices rising at the fastest pace in 7 years. Failure at the late April ¥126.95 low on a daily chart closing basis would confirm a topping pattern with a slip back towards the March peak and 55-day SMA at ¥125.31 to ¥124.87 expected to unfold in this scenario.
Minor resistance remains to be seen at the 22 April high at ¥129.11 and also at the mid-April and mid-May highs at ¥129.40 to ¥129.78. This resistance area would need to be overcome for the uptrend to resume.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
