FX Snapshot

The pound has surged overnight following the election results in the UK, while the Aussie has enjoyed some upward moves as well thanks to the general recovery in risk appetite. USD/JPY seems poised for an upward breakout, but will be dependent on the NFP reading later for real direction.

Euro
Source: Bloomberg

GBP/USD holds on to its gains
GBP/USD has held on to the majority of its overnight gains, but for the moment $1.55 is still a step too far. The key for short-term direction will be a break through this level – the highs of 29/30 April – and then on to the $1.5570 highs of late February. Further gains will require a break of the 200-day moving average (MA), $1.5640. A move below $1.54 puts the market back on a downward trajectory, with an initial target of $1.51.

EUR/USD in retreat
Yesterday saw EUR/USD fall back through the 100-day simple moving average (SMA), $1.12, and with the daily relative strength index and stochastics now in retreat, it looks increasingly likely that we will see further losses. A first target would be the lows of 5 May around $1.11, which would take the price through the 200-hour SMA, $1.1160. Any bounce today must clear $1.14.

AUD/USD bounces back
The bounce from the overnight lows points towards a good day for risk assets. The key now is for AUD/USD to clear the $0.80/$0.85 mark, which has proved such a hurdle over the past few weeks. A failure to hold the overnight gains would target the lows from earlier in the week, around the $0.78 mark.

USD/JPY climbs to top of range
This currency pair has gone all the way back to the top of the range, at Y120, but has run into the descending trendline off the March highs, around Y120.10. If it can clear this we look to this week’s high at Y120.50. Any drop back thanks to a weakening USD following a poor NFP today would still need to clear Y119 to break out of the range, with further support at Y118.60.

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