EUR/USD, GBP/USD recover from multi-week lows while USD/JPY surges ahead
Outlook on EUR/USD, GBP/USD and USD/JPY amid German ZEW, record UK wage growth and solid Japan economy.
EUR/USD recovers from five-week low
EUR/USD’s slide from its $1.1275 July peak has taken it to Monday’s five-week low at $1.0875 before recovering on Tuesday morning ahead of Germany’s ZEW economic sentiment publication.
The cross may recover to the 55-day simple moving average (SMA) at $1.0948 around which it may run out of steam, though. Further up lies the minor psychological $1.10 region around which it oscillated for much of August.
A, for Tuesday, unexpected slip through Monday’s $1.0875 low would push the $1.0834 July low to the fore, ahead of the 200-day SMA at $1.0783.
GBP/USD bounces off six-week low on record UK wage growth
GBP/USD is seen bouncing off its $1.2617 six-week low as UK wage growth hits a record high, leaving the door open for the Bank of England (BoE) to continue on its monetary tightening path.
Average wages excluding bonuses in the UK increased 7.8% year-on-year (YoY) in the second quarter of 2023, the most on record and significantly above expectations of 7.4%. Meanwhile, the unemployment rate edged higher to 4.2%, the highest since late 2021, while the number of job vacancies fell by 66K.
GBP/USD is likely to revisit its 55-day SMA and also its July-to-August downtrend line at $1.2746 to $1.2764. Only a rise and daily chart close above the next higher $1.2819 high seen last week would technically indicate that a bullish reversal is taking place.
Good support remains to be seen between the early and mid-August lows at $1.2621 to $1.2617.
USD/JPY trades in nine-month highs despite strong Japan growth
USD/JPY is on track for its seventh consecutive day of gains and trades at levels last seen in November 2022 while aiming for the psychological ¥150.00 region.
The continued advance in the USD/JPY pair comes despite Japan’s economy growing at a faster pace than expected in the second quarter of 2023.
The June peak and accelerated July-to-August uptrend line at ¥145.07 to ¥144.96 should offer support.
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