EUR/USD, EUR/GBP and USD/JPY drop post FOMC minutes

EUR/USD consolidates below its one-month highs

EUR/USD’s advance from its mid-May $1.035 low has taken it to a one-month high at $1.0748, below which the cross has been consolidating since yesterday after the publication of the Federal Open Market Committee (FOMC) minutes and 50 basis point (bp) rate hike in the Federal Reserve (Fed) funds rate range to 0.75%-1%.

While yesterday’s low at $1.0643 underpins, the 55-day simple moving average (SMA) at $1.0777 as well as the 2022 downtrend line at $1.083 remain in sight.

Minor support below yesterday’s low at $1.0643 is seen along the two-week support line at $1.0608 and at Friday’s $1.0533 low. Further minor support sits between the April and 6 May lows at $1.0483 to $1.0472.

EUR/GBP slips back towards the 200-day simple moving average

Earlier this week EUR/GBP faltered at £0.8587, not far below the £0.8618 mid-May peak, before it rapidly came off again as German GfK consumer confidence data for June came in at a worse than expected -26.0 compared to a revised -26.6 record low in May.

A slide back towards the 200-day SMA and two-month support line at £0.8445 to £0.8438 may soon unfold, if Tuesday’s low at £0.848 were to be slipped through. Any intraday bounce is expected to run out of steam around the 16 May high at £0.8534.

Below the two-month support line the 55-day SMA can be found at £0.8407 and last week’s low at £0.8393 which, together with the early-May low at £0.8368, remains key for the currency pair’s uptrend. If slipped through, the technical picture would become bearish again.

USD/JPY slips through key support

USD/JPY is once more falling through its late-April ¥126.95 low, having already briefly done so on Tuesday before stabilising, following the publication of the FOMC minutes and 50 bp rate hike to 0.75%-1% by the US Fed and comments by the Bank of Japan (BoJ) Governor Haruhiko Kuroda in which he said that the central bank can execute a smooth exit from its ultra-loose monetary policy.

This comes after Japan’s consumer prices rose by 2.5% year-on-year (YoY) in April, marking the 8th straight month of annual inflation, with food prices rising at the fastest pace in seven years. Failure at the late April ¥126.95 low, and ideally also at this week’s low at ¥126.37, on a daily chart closing basis would confirm a topping pattern with a slip back towards the 55-day SMA and March peak at ¥125.70 to ¥125.10 likely to ensue in this scenario.

Minor resistance remains to be found at the 22 April high at ¥129.11 and also at the mid-April and mid-May highs at ¥129.40 to ¥129.78. This resistance area would need to be overcome for the March-to-May uptrend to resume.