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Dollar strength sends EUR/USD and GBP/USD lower, while USD/JPY pushes higher

Dollar strength has helped to drive EUR/USD and GBP/USD lower, while USD/JPY has surged into a fresh 15-month high.

EUR/USD to continue its decline after breaking key support

EUR/USD has managed to break below the critical $1.1847 support level this morning, bringing a fresh lower low to maintain the bearish trajectory seen over the course of June. That points towards a bearish continuation from here, with further weakness likely to take shape.

A breakup through the $1.1884 level would bring about a more neutral outlook, raising the likeliness of a upwards retracement phase. However, we would ultimately require a push through the $1.1975 level to bring an end to the ongoing bearish outlook.

GBP/USD on the slide after hitting fresh two-month lows

GBP/USD has continued its downward trajectory, with the decline through $1.3786 bringing about a new two-month low for the pair. Dovish comments from Andrew Bailey reiterated the divergence in outlook between the Federal Reserve (Fed) and the Bank of England (BoE), raising the likeliness of further weakness.

With that in mind, another move lower looks likely before long, with any short-term gains expected to represent a retracement phase. In particular, a rise through $1.3873 would bring a deeper retracement phase, while a push through $1.40 would be required to bring an end to this month-long downtrend.

USD/JPY spike starts to ease

USD/JPY ended its retracement phase relatively early this week, with the price pushing sharply higher at the 50% retracement level. The push up through the trendline resistance does raise the chances of an exit into a phase that is more one-dimensional in terms of its bullish trajectory.

Nonetheless, we still remain at risk of another retracement given the way that things have shaped up over the past month. With that in mind, a break below the ¥80.00 threshold on the stochastic could bring a potential signal that momentum is swinging back in favour of a bearish retracement phase. In any case, a wider bearish outlook holds unless the price falls back below the ¥110.41.

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