EUR/USD and USD/JPY hover above this week’s lows while EUR/GBP slips
Outlook on EUR/USD, EUR/GBP and USD/JPY in quiet trading.
EUR/USD stabilises in low volatility trading
EUR/USD's swift sell-off from last week’s $1.1033 high to this week’s $1.067 low came to a sudden halt as the US dollar rallied on the back of much stronger-than-expected US employment data on Friday.
The cross has been trading in a low volatility range these past few days and is slowly rising on Thursday morning as Germany’s inflation rate rises less than expected. It edged up to 8.7% in January versus 8.6% in December, but below a market forecast of 8.9%. Month-on-Month (MoM) it increased by 1%, reversing a 0.8% decrease in December, when a federal one-off gas and heat payment for all households and small- to medium-sized businesses was introduced and kept inflation at bay.
The 55-day simple moving average (SMA) and Tuesday’s low at $1.0679 to $1.067 now act as support and as long as it holds, a recovery back to the mid-January low at $1.0766 may ensue. Above it sits the late January low at $1.0802. Failure at $1.067 could lead to a slip towards the $1.0574 mid-December low being seen.
EUR/GBP slips back towards late January high at £0.8852 ahead of UK Q4 GDP data
EUR/GBP's three-day slide from last week’s high at £0.8978 is fast approaching the 25 January £0.8852 high, ahead of Friday’s UK Q4 preliminary gross domestic product (GDP), industrial production and trade balance data.
Below it a tentative support line can be found at £0.8809. Immediate resistance sits between the £0.8877 and £0.8897 late December and January highs.
USD/JPY hovers above this week’s low at ¥130.48
The surge higher in the USD/JPY cross on the back of a rallying US dollar - following the 517k jobs created in the US economy - ran out of steam at Monday’s ¥132.90 high, marginally below the 55-day SMA, now at ¥132.75, with it dipping back to Tuesday’s ¥130.48 low, above it has been trading since.
The odds favour further downside being seen as the currency pair remains in a downtrend with the ¥129.52 early January low being eyed on a slip through the 20 December low at ¥130.58 and this week’s low at ¥130.48. Further down the early January low can be spotted at ¥127.23 and lie the late April and May 2022 lows at ¥126.95 to ¥126.36.
Strong resistance above ¥132.90 can be found between the early December low at ¥133.63 and the late December and January high at ¥134.50 to ¥134.77. The medium-term downtrend will remain in play while the latter level isn’t overcome on a daily chart closing basis.
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