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EUR/USD and EUR/GBP remain bid while USD/JPY weighs on support

EUR/USD and EUR/GBP point higher as UK consumer confidence hits record low while USD/JPY weighs on key support as Japan inflation rate hits seven and half a year high.

EUR/USD tests two-month downtrend line

EUR/USD rallied to its one-month downtrend line at $1.059 following yesterday’s publication of Eurozone construction data which showed the softest pace of growth in construction activity since December. Construction output increased 3.3% year-on-year in March, easing from a downwardly revised 8.9% rise in February.

An advance above yesterday’s high at $1.0607 would engage the early-May high at $1.0642, a rise above which would be encouraging for the bulls and could lead to the mid-April low at $1.0758 being back in the limelight.

Minor support can now be spotted between the April and early-May lows at $1.0483 to $1.0472.

Only a currently unexpected slip through and daily chart close below Wednesday’s low at $1.0461 would put the early-May and January 2017 lows at $1.0350 to $1.0341 back on the cards.

EUR/GBP little changed despite lowest ever consumer confidence data

[currencies:EUR/GBP’s] bullish reversal off Tuesday’s £0.8393 low has taken the cross above the 200-day simple moving average (SMA) at £0.8446, above which it has stayed despite the UK GfK Consumer Confidence indicator hitting an all-time low of -40 in May, below the previous low of -39 set in July 2008, amid growing recession fears and the cost of living crisis.

The 200-day SMA and yesterday’s low at £0.8448 to £0.8446 are expected to act as support today, if retested. In case of failure, the 55-day SMA at £0.8401 would be back in sight, together with the early May low at £0.8368.

A rise above yesterday’s high at £0.8495 would put the late-March high at £0.8512 back on the map. While Monday’s high at £0.8534 isn’t bettered, however, overall downside pressure remains in play.

USD/JPY trades close to four-week lows as Japan inflation rate hits seven and a half year high

USD/JPY is trading at levels last seen at the end of April, close to its late April ¥126.95 low as inflation hits a seven and a half year high in Japan.

Japan’s consumer prices rose by 2.5% year-on-year in April, the most since October 2014, following a 1.2% gain in March. The April figure also marked the 8th straight month of annual inflation, with food prices rising at the fastest pace in seven years.

Failure at the late-April ¥126.95 low would confirm a topping pattern with s slide back towards the March peak and 55-day SMA at ¥125.10 to ¥124.87 being on the cards in this scenario.

Minor resistance can be seen at the 22 April high at ¥129.11 and also at the mid-April and mid-May highs at ¥129.40 to ¥129.78. This resistance area would need to be overcome for the uptrend to resume.

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