EUR/USD, EUR/GBP and USD/JPY slip ahead of plethora of central bank speeches
Technical analysis on EUR/USD, EUR/GBP and USD/JPY within their fundamental context.
EUR/USD comes off its new nine-month high
EUR/USD’s near 4% rally from its early January low at $1.0484 low made a new nine-month high at $1.0887 on Wednesday, just short of the late April 2022 high and the 50% retracement of the 2021 to 2022 descent at $1.0936 to $1.094, before tumbling back to $1.0767 on a stronger US dollar ahead of speeches by the European Central Bank (ECB) president Christine Lagarde and Federal Open Market Committee (FOMC) members Brainard and Williams.
If this level were to be slipped through, the mid- to late December highs at $1.0736 to $1.0715 will most likely be in focus but are expected to offer good support. Further support can be found around the $1.0663 to $1.0658 16 to 28 December highs.
Resistance between last and this week’s highs at $1.0867 to $1.0887 is expected to put a lid on any short-term rally higher this week.
EUR/GBP slips to one-month low
EUR/GBP’s rise to its current January high at $0.8897 gave way to a swift decline close to the 55-day simple moving average (SMA) at £0.873 ahead of speeches on Thursday and Friday by ECB president Lagarde and for technical reasons.
The fact that last week’s high was accompanied by negative divergence on the daily Relative Strength Index (RSI), which made a lower high, and the fall out of a wedge formation both pointed to a sell-off which has now taken shape.
Below the 55-day SMA at £0.873 the 23 November high and 19 December low at £0.8701 to £0.8691 may be reached. Further down sits the 28 November high at £0.8676 which may also act as support. Resistance above the 9 January low at £0.8769 comes in around the 3 January £0.8783 low with more significant resistance sitting at the £0.8828 November peak.
USD/JPY nears its ¥127.23 current January low as its downtrend resumes
USD/JPY’s is seen trading back in eight-month lows, having briefly risen to ¥131.58 as the Bank of Japan (BoJ) held firm on its yield curve range and kept its interest rate at an extremely dovish -0.1% (since 2016) on Wednesday.
Below the early January low at ¥127.23 lie the late April and May 2022 lows at ¥126.95 to ¥126.36. Minor resistance remains to be seen between the ¥129.52 early January low and the 20 December low at ¥130.58. Downside pressure should remain in place while no rise above Wednesday’s high at ¥131.58 is seen on a daily chart closing basis.
The medium-term downtrend will stay intact while the late December and current January highs at ¥134.50 to ¥134.77 aren’t overcome on a daily chart closing basis.
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