EUR/USD takes a step closer to parity and GBP/USD hits post-pandemic low, while USD/JPY pinned by safe haven flows
The dollar is back on top as recession and political fears hit EUR/USD and GBP/USD, but USD/JPY is relatively calm.
EUR/USD parity now just a matter of time?
The dollar is once again in strong form with EUR/USD, as recession fears drive investors to safe havens. A move to parity for EUR/USD seems very likely at this point, having been predicted by many for a while.
The price slumped yesterday to its lowest level since December 2002, dropping through $1.04 and $1.03 in quick succession. Parity now seems to beckon, with few likely support levels in the way.
It seems difficult to summon up any bullish view, but a recovery above $1.04 would then put the 50-day simple moving average (SMA) at $1.0553 and then the June lower high at $1.06 into view.
GBP/USD hits fresh post-pandemic low
The dollar surge mentioned above was complemented by the growing political crisis in the UK, as the chancellor and health secretary, along with other government ministers, resigned from their roles. While the PM holds on for now, the risk of a leadership challenge has dramatically increased over the past 24 hours.
GBP/USD touched a fresh post Covid-19 pandemic low yesterday, as the latest downward move from the June lower highs gathered pace. As noted before, there is little in the way of support until the March 2020 low itself around $114.80.
A recovery above $1.20 might provide some short-term relief, but as with EUR/USD, the pair still needs to move above the June lower high around $1.237 to put even a small dent in the recent strong downtrend.
USD/JPY hangs on near highs
As global recession fears mount, the key safe havens of the USD/JPY are popular once more, which means that upward progress here continues to stall.
There is little in the way of a move to the downside either, it must be said, leaving the pair stuck in a fairly narrow trading range. The broader uptrend is still intact of course, and the price is only a short distance away from the June highs.
In the event of a drop, ¥135.00, ¥132.00 and then ¥131.25 come into view as potential support.
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