EUR/USD, GBP/USD and USD/JPY as Moody’s cuts US debt outlook to “negative”
Outlook on EUR/USD, GBP/USD and USD/JPY ahead of Tuesday’s US inflation data and amid US debt outlook downgrade.
EUR/USD remains side-lined
EUR/USD’s minor consolidation below last week’s near two-month high at $1.0756 continues with it still remaining above its the 55-day simple moving average (SMA) at $1.0641 despite Moody’s cutting its US debt outlook from “stable” to “negative” due to a significant increase in debt servicing expenses and the presence of “entrenched political polarisation.”
While the 55-day SMA underpins, the medium-term bullish trend remains intact. Were it to be slipped through on a daily chart closing basis, the late-September high at $1.0618 may offer support.
For last month’s gradual advance to continue a rise and daily chart close above Thursday’s high at $1.0725 would need to be seen. Were it and Monday’s high at $1.0756 to be bettered, the 200-day SMA at $1.0803 would be eyed, together with the $1.0834 July low.
GBP/USD tries to stem recent downside momentum
Last week’s GBP/USD rejection by the 200-day SMA at $1.2436 has taken the cross to Friday’s $1.2188 low from which it is currently trying to recover.
For such a bounce to gain traction not only the 55-day SMA at $1.2296 but also Thursday’s high at $1.2308 would need to be overcome. In this case the mid-October peak at $1.2337 could be back in focus.
A drop through Friday’s low at $1.2188 would open the way for the uptrend channel support line at $1.213 to be reached.
USD/JPY nears October 2022 peak
USD/JPY is on track for its sixth consecutive day of gains while it is approaching its October 2022 peak at ¥151.95 as Japan inflation nears a three-year low. Producer prices in Japan rose by 0.8% year-on-year in October which was the lowest inflation since a deflation in February 2021 and marked the tenth straight month of a slowdown.
As the currency pair continues to advance, the risk of Bank of Japan (BoJ) currency intervention is increasing by the day, especially now that the ¥151.73 late-October peak has been overcome.
The one-week uptrend line at ¥151.45 currently underpins the cross. Below it minor support can be spotted at the ¥150.78 26 October high. Further down lies the psychological ¥150.00 mark.
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