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EUR/USD, EUR/GBP slide while USD/JPY surges higher on hawkish Fed chair’s speech

EUR/USD, EUR/GBP fall for third day in a row while USD/JPY trades in new 6-year highs above the ¥120.00 mark as Fed's chairman Jerome Powell asserts hawkish stance and mentions possibility of 50 basis point rate hike.

EUR/USD drops third day in a row on Fed chair’s hawkish speech

EUR/USD, having been rejected by its two-month downtrend line last week, fell for the third day in a row as the US Federal Reserve’s (FED) chairman Jerome Powell struck a more assertive tone than he did in last week’s press conference by hinting at a potential 50 basis point (bp) rate hike going forward.

The mid-March $1.0901 low is thus in focus, a fall through which would lead to the $1.0806 early March low being back in play.

While the cross remains below last week’s high at $1.1137, this year’s downtrend remains intact.

EUR/GBP is leaving its recent consolidation range to the downside

EUR/GBP is slipping through the 55-day simple moving average (SMA) and March 11 low at £0.8361 ahead of tomorrow’s February UK consumer price index (CPI) data which will be closely assessed by market players.

Last week the Bank of England’s (BoE) hiked its base rate to 0.75% as it forecast inflation hitting 8% in April with worse to come as the oil price is on the rise again with the war in Ukraine about to enter its second month.

The £0.831 to £0.8286 support zone may be reached in the days to come but is likely to hold, as it did in January and February. Minor resistance above the 17 March low at £0.8368 sits at the £0.8408 25 February high.

USD/JPY trades in 6-year highs above the ¥120.00 mark

USD/JPY accelerated to the upside and traded in new six-year highs above the ¥120.00 mark on the back of Fed chair Jerome Powell’s hawkish speech yesterday. It led to the US 10 year yield hitting fresh multi-year highs around 2.3% last night and drove the US Dollar higher.

The December 2005, December 2014 and March 2015 highs at ¥121.39 to ¥122.02 are being targeted, above which the November 2015 high can be spotted at ¥123.75.

Slips should find support around the minor psychological ¥120.00 level. Below it there is no support to speak of until the 16 March high at ¥119.12.

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