USD/JPY trades in fresh 32-year highs while EUR/USD and EUR/GBP consolidate
Fundamental commentary and technical analysis on USD/JPY, EUR/USD and EUR/GBP as greenback appreciates on expectations that US Fed will plough ahead with its aggressive tightening plans to combat soaring inflation.
EUR/USD consolidates amid stronger US dollar
EUR/USD’s recent surge higher is taking a breather as the US dollar rises on expectations that the US Federal Reserve (Fed) will plough ahead with its aggressive tightening plans to combat soaring inflation.
EUR/USD thus consolidates below Tuesday’s $0.9875 high and may slip back towards the 11 October high at $0.9774 ahead of Thursday’s September German Producer Price Index (PPI) data release.
In case of the current consolidation phase being followed by renewed upside, a rise above $0.9875 could lead to the $0.9901 August low and also the $0.9946 to $0.9962 zone being reached. It consists of the mid-September low, 55-day simple moving average (SMA) and June-to-October downtrend line.
EUR/GBP consolidates amid 40-year high inflation
EUR/GBP is trying to break through its two-month downtrend line at £0.8694 as UK inflation comes in above expectations at 10.1% in September, matching its 40-year high from July, with upward pressure from food and energy.
Tuesday’s high at £0.8731 is thus back in the picture, a rise above which would push the £0.8787 mid-September high to the fore. If overcome, the 26 and 28 September lows at £0.8853 would be next in line.
Minor support below Wednesday’s £0.8681 intraday low comes in along the 55-day SMA at £0.8640. Below it lies the mid-September low at £0.8626 and the early September low at £0.8567.
USD/JPY trades in 32-year highs ahead of Japanese trade balance data
USD/JPY continues to surge higher and trades in 32-year highs, having risen above the August 1998 peak at ¥147.64. The cross is swiftly heading towards the psychological ¥150 mark ahead of Thursday’s Japanese trade balance data as the Bank of Japan (BoJ) sticks to its dovish stance.
Its governor Haruhiko Kuroda recently vowed to keep ultra-easy monetary policy to support Japan’s economic recovery and stressed the need to achieve the 2% inflation target in a sustainable and stable manner, thus pushing the Japanese Yen to a new multi-decade low.
A rise above the minor psychological ¥150 mark would put the June 1989 high at ¥150.33 on the map, unless the BoJ were to intervene once more as it did in September. Potential slips should find support at Tuesday’s ¥148.14 low. Much further down lies more significant support at the September intervention peak at ¥145.91.
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