EUR/USD and GBP/USD move up, while USD/JPY drops back
Some pre-FOMC dollar weakness has allowed the euro and sterling to make some gains against the dollar, while USD/JPY is lower in early trading.
EUR/USD makes headway
Reports of an emergency in the European Central Bank (ECB) meeting have helped stabilise the EUR/USD, after the price managed to avoid additional heavy falls yesterday.
If the price continues to remain above $1.04, then additional upside towards the 50-day simple moving averages (SMA) comes into play, followed on by the $1.0727 and $1.0777. Continued declines below $1.04 would bring $1.055 into view, the low from early May. Below this, the downtrend moves into play again, with the potential for additional lower lows.
GBP/USD edges up after losses
GBP/USD has succeeded in stabilising for now above $1.20, having briefly dropped below this level yesterday. But with a new lower low having been created the downtrend is still firmly in play.
A short-term rebound would bring $1.22 and then $1.246 into view. However, this would leave the downtrend intact, and it would require a move back above $1.256 to suggest any medium-term recovery is in play. Having fallen below the May 2020 low, the risk now for sterling is a fresh move towards the $1.15 low from March 2020.
USD/JPY drops back from new high
USD/JPY is edging back in early trading, having hit a new high in its uptrend yesterday. A reversal below ¥133 would suggest a move back to March 2022 rising trendline support, or to the 50-day SMA just below it (currently ¥129.19).
For the moment some consolidation seems likely; a more cautious Federal Reserve (Fed) at today’s meeting could see the dollar weaken in the short-term, but the overall gulf in monetary policy between the Federal Open Market Comittee (FOMC) and the Bank of Japan (BoJ) should keep the general uptrend intact.
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