Weak German PMI drives EUR/USD and GBP/USD lower as USD/JPY pauses at 76.4% level
The dollar continues to struggle, but while EUR/USD, GBP/USD and USD/JPY have spent the week pausing from their wider trend, they are likely to resume before long.
EUR/USD consolidates but short-term uptrend remains for now
EUR/USD has been on the rise over the course of the past week, with the price rising into a two-week high yesterday. Volatility around the European Central Bank (ECB) decision to hike by 50-basis points (bps) failed to provide much by way of sustainable upside, with short-term moves ultimately settling back into the same levels seen prior to the announcement.
For now, we have not seen the breakdown through $1.0119 support to direct us towards a resumption of the wider bearish trend. While the recent 76.4% Fibonacci pullback into $1.0156 points towards a potential short-term rebound, this morning’s poor German purchasing managers index (PMI) readings have raised the likeliness of a break lower to bring the bears into play.
GBP/USD consolidates below trendline resistance
GBP/USD has been drifting lower over the course of the week, with the descending trendline providing upside resistance alongside the 100-simple moving average (SMA). A move up through the $1.2045 level would signal an exit from this current consolidation phase, with another move upwards towards the 61.8-76.4% Fibonacci zone coming into play.
Whether or not we see such an upside move over the near term, the fact is that we do remain within a wider bearish trend then signals a high likeliness that we end up rolling over before long. Only a break above the $1.2406 level would bring about a more confident and long-lasting bullish outlook.
USD/JPY falls into 76.4% Fibonacci support level
USD/JPY has been on the back foot over the course of the week thus far, with the price moving below trendline support yesterday. That move has taken the price into the 76.4% Fibonacci support level at ¥137.17, which is accompanied by the 100-SMA.
The wider bullish trend provides expectations of another move higher from here, with a break below the ¥1.3647 swing low required to bring about a potential bearish reversal signal for the pair.
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