EUR/USD, GBP/USD rally while USD/JPY stabilizes post BoJ minutes
Outlook on EUR/USD, GBP/USD and USD/JPY as US rate cycle peak may have been reached and as US yields slide.
EUR/USD rally has further to go
EUR/USD's strong rally on softer US employment data out of Friday is expected to continue as German factory orders beat forecasts and as the US Federal Reserve (Fed) is no longer expected to hike its rates one last time in this cycle which increases the odds of a soft landing in the US.
The rise above the $1.0736 late-September high puts the 200-day simple moving average (SMA) at $1.0808 on the cards, together with the $1.0834 July low.
Potential slips should find support around the $1.0695 late-October high below which meanders the 55-day SMA at $1.0654. While above it, upside pressure should remain in play.
GBP/USD confirmed technical bottoming formation
Last week’s GBP/USD rally and daily chart close above its $1.2337 mid-October high as markets priced in no more Fed rate hikes in this cycle and expect a soft landing in the US economy has confirmed a technical bottoming formation for the cross.
The 200-day SMA at $1.2435 represents the next upside target ahead of the 11 September high at $1.2548.
Slips may find support between the mid-October high and the 55-day SMA at $1.2337 to $1.2333.
USD/JPY stabilizes as BoJ continues monetary easing
USD/JPY has come off last week’s 33-year high at ¥151.73 as the Bank of Japan (BoJ) in its monetary policy minutes redefined its 1% long-term interest rate as a loose "upper bound" rather than a rigid cap and removed its pledge to guard the level. Since July, the long-term interest rate has been capped at 1%, an increase over the previous cap of 0.5%.
The July-to-November tentative uptrend line at ¥149.40 currently underpins the cross, together with the late-October low at ¥148.81. Were this level to give way, at least a minor top would be formed with the 55-day SMA at ¥148.40 being in sight.
Minor resistance above the psychological ¥150.00 mark can be found at the October 2022 peak at ¥150.94.
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