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.
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.
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.
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.
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