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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Flight-to-safety flows into the US dollar push EUR/USD, GBP/USD lower and USD/JPY higher

​​Outlook on EUR/USD, GBP/USD and USD/JPY amid ongoing US debt ceiling negotiations and as Germany enters a technical recession.

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​​​EUR/USD slips to two-month low as Germany enters a recession

EUR/USD’s decline has taken it to a two-month low on flight-to-safety flows into the US dollar due to ongoing US debt ceiling negotiations and as Germany, having seen two consecutive quarters of negative growth, technically enters a recession.

​The cross nears the 24 March low at $1.0714 below which sits the early-March high at $1.0695.

​Resistance continues to be seen at last week’s $1.076 low and then around the $1.0789 early-April trough. While the next higher 10 April low at $1.0832 isn’t overcome, downside pressure should retain the upper hand.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

​GBP/USD remains under pressure amid ongoing US debt ceiling negotiations 

​GBP/USD’s​ descent is threatening to slip through its $1.2345 10 April low as the US dollar scales over two-month highs.  

​If the currency pair were to make a daily chart close below this level, the mid-February high and early-April low at $1.2275 to $1.227 would be targeted next. 

​Immediate resistance can be spotted all the way up to the 25 April low at $1.2387, above which meanders the 55-day simple moving average (SMA) at $1.2403 which also offers potential resistance.

GBP/USD chart Source: IT-Finance.com
GBP/USD chart Source: IT-Finance.com

​USD/JPY hits a new six-month high 

USD/JPY continues its ascent as investors were spooked by Fitch’s move to put the US on “negative watch”, prompting the greenback to rally further on flight-to-safety flows. 

​So far, the currency pair has risen to a six-month high with the ¥139.89 late-November peak about to be reached. Together with the minor psychological ¥140.00 region, it may well cap this week. 

Support is seen along the one-month uptrend line and last week’s high at ¥138.75. More important support can be found between the March and early-May highs at ¥131.91 to ¥137.77. 

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

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.

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