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Dollar gains ground, with EUR/USD and GBP/USD weakening while USD/JPY touches a new 23-year high

The dollar continues to gain ground, with EUR/USD and GBP/USD heading lower, and USD/JPY touching a fresh 23-year high

EUR/USD continues to slide in early trade

EUR/USD remains under pressure as traders continue to see the US dollar as a favoured asset that benefits from both expectations of strong upward interest rate movement, and the role as a haven at times of risk for stock markets. The pair has been hit hard this morning, signalling the potential for a swift resumption of the downtrend rather than a wider retracement back towards trendline resistance.

With the stochastic rolling over, we can see that momentum is shifting back in favour of the bears. The short-term pattern of lower highs brings expectations of further weakness unless the price breaks up through the $1.0221 swing high. Until then, another move lower is expected.

GBP/USD rolling over from 61.8% Fibonacci resistance

GBP/USD has started to head lower once again, following a rebound into the 61.8% Fibonacci resistance on Friday. With that in mind, we are looking at a potential continuation of the intraday trend of lower highs and lows.

As such, further downside is expected unless we see the price rise up through the $1.2165 swing-high established one week ago. A push above that key $1.2165 level would bring about expectations of a wider retracement of the sell-off from $1.2406. Until then, the bears are expected to remain in charge.

USD/JPY manages to break into fresh 23-year high

USD/JPY has been a major outperformer over the course of the past six-months, with the widening gap in inflation, and thus monetary policy outlook seeing the pair surge sharply higher.

The latest move higher has taken price into a fresh 23-year high, with the intraday trend of higher highs and higher lows remaining in play for the time being. That is expected to be the case for some time yet, with a break back below the recent swing-low ¥1.3532 required to bring the first signal that we could do anything other than trend upwards. As such, while we could see further weakness over the short-term, such a move would be viewed as providing a better entry price for another bullish turn for the USD/JPY currency pair.

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