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Risk-off sentiment helps lift the dollar, impacting EUR/USD, GBP/USD, and USD/JPY

Risk-off sentiment hits EUR/USD and GBP/USD, while USD/JPY starts to reverse higher after recent declines.

EUR/USD heads lower as Europe braces for fresh lockdowns

EUR/USD has been under pressure once again, with rising cases of a more contagious Covid-19 variant sparking fresh lockdowns in mainland Europe.

The prior retracement into $1.199 ultimately sent the pair back into a four-month low. With that in mind, there is a strong chance we could see the further downside from here. A break-up through the $1.199 zone is ultimately required to negate this bearish trend. Until then, near-term upside is likely to be sold into.

GBP/USD drops out of consolidation zone

GBP/USD has also been hit from a risk-off move, with the pair falling out of its recent range by taking out the $1.3779 level. That signals a continuation of the recent declines, bringing expectations of further downside.

However, with the stochastic oversold, there is a chance we could see near-term gains as momentum starts to swing in the opposite direction. As such, while we could see short-term relief, a break-up through $1.4006 would be required to negate the current bearish outlook.

USD/JPY breaking higher after recent pullback

USD/JPY has been gradually losing ground over the course of the past week. However, with a clear uptrend in play, there is a strong chance we could see the pair start to reverse higher from here.

A break below the ¥108.33 swing-low points towards a potential bearish continuation. However, with price rising through the upper threshold of a bullish wedge formation, there is a strong chance we see a bullish resurgence here for USD/JPY. Keep an eye out for the ¥108.87 level as a potential bullish breakout signal if price rises through it. Conversely, a break below ¥108.33 would be required to negate this bullish outlook.

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