EUR/USD back above parity as USD/JPY comes off 24-year high while EUR/GBP holds
EUR/USD recovers and USD/JPY slips as traders reassess Fed policy tightening while EUR/GBP is running out of steam.
EUR/USD trades back above parity on reassessed Fed outlook
EUR/USD is recovering from its near 20-year low it briefly made below parity last week as traders reassess the Federal Reserve’s (Fed) tightening path and move away from expectations of a 100-basis point (bp) rate hike at the next meeting. This followed comments by Atlanta and St Louis Fed Presidents Raphael Bostic and James Bullard on Friday which mentioned a second month in a row 75-bp hike was in the pipeline.
Last Wednesday’s high at $1.0122 is likely to be revisited, a rise above which would engage the $1.02 region. Much more significant resistance can be found in the $1.034 to $1.036 zone which consists of the December 2016 and January 2017 as well as the May and June 2022 lows.
Were a renewed descent to take the cross below last week’s low at just above $0.995, however, the $0.9698 to $0.9593 support area would be targeted. It is comprised of the June 2000 and February 2001 highs and the September 2002 low.
EUR/GBP trades in the £0.85 region
EUR/GBP is trading back around its £0.8486 early June low following last week’s brief foray to £0.8403 as the Euro strongly depreciated and dropped below parity versus the US dollar, the first time in nearly 20 years.
Minor resistance above Friday’s high at £0.8513 can be spotted around the 55-day simple moving average (SMA) at £0.8533 and also between the 24 and 30 June lows at £0.8551 to £0.8561. Further up sit the late May and early June highs at £0.8588 to £0.8592.
Below Friday’s low at £0.8465 meanders the 200-day SMA at £0.8443 which is likely to act as support, if retested.
USD/JPY consolidates below its fresh 24-year highs
Last week USD/JPY traded in fresh 24-year highs whilst trying to reach the ¥140.00 mark before consolidating slightly with US retail sales coming in better than expected for June, while consumer inflation expectations softened in July.
With Japan enjoying a public holiday today, the cross seems to be slipping back towards last Monday’s high at ¥137.75 and its May-to-July uptrend line at ¥137.08. Further potential support comes in at the late June high at ¥137.00.
Above the ¥140.00 region lie two medium-term upside targets, one at the April 1991 high at ¥142.80 and the other at the July 1998 peak at ¥147.63. These may be reached on expectations that the Fed continues to pursue its aggressive tightening policy while the Bank of Japan (BoJ) sticks to its dovish stance.
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