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EUR/USD, USD/JPY and USD/CNH post ECB rate hike and amid encouraging China data

​​Outlook on EUR/USD, USD/JPY and USD/CNH following ECB’s rate hike and dovish outlook while China data surprises to the upside.

USD/JPY Source: Bloomberg

​​​EUR/USD trades in 3 ½ month lows post ECB rate hike and dovish outlook

EUR/USD briefly slid below its $1.0636 May low on Thursday following the European Central Bank’s (ECB) tenth rate hike in a row to 4.00% on its deposit rate and its dovish outlook.

​A drop through and daily chart close below Thursday’s low at $1.0632 could lead to a tumble towards the January and March lows at $1.0516 to $1.0484 taking place.

For now, the cross seems to hold, though, and while it does, last week’s low at $1.0687 may be revisited. Provided the currency pair remains below the last reaction high at $1.0769, seen on Tuesday, the July-to-September downtrend remains very much intact.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

​USD/JPY nears its 10-month high

There is no stopping USD/JPY's ascent with the cross approaching its 10-month high at ¥147.87.

A rise above this level could lead to a move towards the ¥150.00 region where the Bank of Japan (BoJ) is expected to intervene, though.

​Immediate upside pressure should be maintained while USD/JPY stays above its July-to-September uptrend line at ¥146.92. While Monday’s ¥145.91 low underpins, the July uptrend remains valid.

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

​USD/CNH consolidates below 11-month high

​USD/CNH’s sell-off from its 11-month high at CN¥7.3681 last Friday, made marginally below its October 2022 peak at CN¥7.3773, has taken it back towards its early-September low at CN¥7.2392. China retail sales growth at three-month highs and its industrial output growth beating estimates have helped to push the cross lower.

​The next downside target is the 55-day simple moving average (SMA) at CN¥7.2444 ahead of the CN¥7.2392 low. Only if the latter were to be slipped through on a daily chart closing basis, would an interim top be formed.

​Minor resistance can now be spotted around the CN¥7.3106 late-August high.

USD/CNH chart Source: IT-Finance.com
USD/CNH chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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