EUR/USD, EUR/JPY and USD/JPY outlook ahead of plethora of central bank meetings
Outlook on EUR/USD, EUR/JPY and USD/JPY ahead of FOMC and ECB rate decisions.
EUR/USD muted ahead of Fed and ECB rate decisions
EUR/USD’s reversal off Wednesday’s four-month high at $1.1017 on softer eurozone inflation, which brought forward European Central Bank (ECB) rate cut expectations, took the cross to last week’s low at $1.0724.
It is now hovering above this low in low volume trading ahead of Wednesday’s Federal Open Market Committee (FOMC) and Thursday’s ECB meetings.
A fall through $1.0724 would engage the 55-day simple moving average (SMA) and late October high at $1.0695 whereas a rise above Friday’s high at $1.08, Thursday’s high and the 200-day SMA at $1.0817 to $1.0825. Further up the 22 November-low at $1.0853 may also act as resistance, were it to be reached at all.
Sharp EUR/JPY drop is followed by a swift recovery rally
EUR/JPY’s sharp decline off its ¥164.30 November peak amid ECB rate cut expectations accelerated last week when the Bank of Japan (BoJ) Governor Kazuo Ueda’s hinted at ending the country’s negative interest-rate policy.
Since then a swift reversal to the upside is taking the cross back up towards its late October-low at ¥157.70 despite a business survey index of large manufacturing firms in Japan hitting a two-year high.
Further up the steep November-to-December downtrend line at ¥158.98 should also act as resistance. Minor support is seen at Friday’s ¥156.09 high.
USD/JPY resumes its ascent
USD/JPY’s sharp drop amid the BoJ talking about phasing out its massive stimulus next year has taken it to ¥141.63, to around the 200-day SMA at ¥142.34 which acted as support last week.
Since then, a recovery rally has been underway with the two-month downtrend line and the 20 November low at ¥147.12 to ¥147.15 being within reach.
While the next higher reaction high on the daily chart at Wednesday’s ¥147.50 high isn’t overcome, overall downside pressure retains the upper hand.
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