Euro weakened by ECB meeting, and USD/JPY roiled by hints of change in Bank of Japan policy
The ECB’s cautious rate hike yesterday hit the euro, while USD/JPY has seen significant volatility due to the apparent changes in the Bank of Japan’s policy approach.
EUR/USD drops back after dovish ECB meeting
Yesterday’s European Central Bank (ECB) meeting negated the signs of a higher low and sent the pair EUR/USD tumbling.
Further losses have seen the pair drop to a three-week low, below $1.10 once more. The 50-day simple moving average (SMA) may become support, while a move to $1.0835 would bring the June lows into view.
Bulls will want to see a recovery above $1.10 to provide hope that a low has been formed, and allow the pair to resume its move higher.
EUR/GBP struggles after ECB
The pair EUR/GBP rallied from the £0.855 level yesterday and is making a modest move higher this morning.
This may have created a higher low, though the price was unable to hold on to its gains yesterday, and it also failed to hold near the 50-day SMA. Further evidence of a bounce would need to come through a close above the 50-day SMA; this would then bring the highs of mid-June around £0.8675 into view.
Sellers will want to see a reversal back below £0.855 to open the way to the £0.85 level again and revive the downtrend.
USD/JPY struggles for direction
The Bank of Japan (BoJ) dealt a severe blow to the bullish thesis, knocking the price of the pair USD/JPY lower overnight on reports it might actually begin to tweak its yield curve control policy.
Losses for now have been contained at ¥138.00, and the spike higher was knocked back from ¥140.50. This leaves the price with an indecisive outlook for now – bears will want a close below ¥138.00 and then below ¥137.23, the low from mid-July.
Alternately, if the price can recover ¥140.00 a bullish view may yet emerge once more, and then a move above ¥141.90, the high of last week, would signal that the uptrend had recovered.
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