Risk off moves push down EUR/USD, AUD/USD and USD/JPY
Declines continue across major FX pairs, as the risk-off atmosphere continues to build.
EUR/USD continues to decline
Yesterday’s US consumer price index (CPI) reading might have marked the first month-on-month (MoM) slowing of price growth in almost a year with EUR/USD, but the overall strength in the US dollar remains firmly in place. After holding above $1.05 for most of the past two weeks, a bearish move with the drop below $1.05 puts the price on a fresh move to the downside, creating a lower low.
In the space of six weeks the price has fallen from $1.12 to $1.05, and now seems poised for fresh losses.
Given the size of the downward move in recent weeks any rebound must be viewed as short-term bounce that will merely create a lower high and solidify the current downtrend.
AUD/USD losses build
The broader global risk-off move shows no sign of slowing down. This has had AUD/USD hard, as one of the currency pairs most attuned to global risk appetite.
In addition, the slowing of gains in commodity prices, itself a function of the stronger dollar, has not helped matters.
Additional declines would seem to point towards a test of $0.6828 and then $0.667. The recent drop below $0.70 confirms the bearish move, with the likelihood that even a bounce towards $0.71 would only provide a fresh selling opportunity.
USD/JPY drops below $1.29
It looks like a short-term retracement could be at hand here with USD/JPY, as the price finally begins to move lower after mostly sideways action for the month so far.
This could develop into the first serious pullback in months here, and might see the ¥124.00 area tested, and result in the creation of the first higher low here since the beginning of the year.
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