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EUR/USD, EUR/GBP rally strongly in wake of hawkish ECB while USD/JPY recovers

EUR/USD flirts with the January high after ECB press conference, EUR/GBP reversed from major support and USD/JPY in recovery mode.

EUR/USD’s surges higher on hawkish ECB

EUR/USD rallied by more than 150 pips following the European Central Bank’s (ECB) president Lagarde’s hawkish comments in which she declined to rule out an interest rate rise this year saying the bank would assess conditions very carefully and there were "no pledges without conditionalities".

The January peak at $1.1482 is thus within reach, a rise above which would put the $1.1513 to $1.1529 area back on the cards. It consists of the October and 5 November lows.

Potential slips should find support along the breached 2021-to-2022 downtrend line at $1.1412. Further support can be spotted between the late November and December highs at $1.1386 to $1.1382.

EUR/GBP rallies from major long-term support in the wake of BoE and ECB meetings

Yesterday EUR/GBP first slipped to its key long-term support at £0.8305 to £0.8277 following the Bank of England’s (BoE) widely anticipated rate hike by 25 basis points (bps) to 0.5% before strongly rallying from it once the ECB's president Lagarde made hawkish comments. This has led to a reversal in the trend with a very long bullish candlestick having been formed, encompassing the last seven trading days which is very bullish price action.

The rally through the three-month downtrend line and above the January peak at £0.8422 bodes well for the bulls with the 200-day simple moving average (SMA) at £0.8516 being targeted. For today minor potential resistance sits at the £0.8454 mid-December low.

Support now comes in between the November trough and breached downtrend line at £0.8381 to £0.8374.

USD/JPY bounces off the 55-day SMA

USD/JPY’s drift lower from the late January high at ¥115.68 paused along the 55-day SMA at ¥114.41 before heading back up again with the mid-January high at ¥115.06 being within its sights.

Next up lurk the November peak at ¥115.52 and late January high at ¥115.68, only a rise above which would lead to the early January high at ¥116.35 being back on the map.

Minor support sits between the one-month support line and 2 February low at ¥114.36 to ¥114.16 with further support coming in at the 8 December high at ¥113.96. More important support lies between the mid-to-late January lows at ¥113.48 to ¥113.47.

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