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EUR/USD in near one-month, EUR/GBP in three-month highs while USD/JPY slips lower

EUR/USD and EUR/GBP continue their advance as high inflation puts the ECB under pressure to start tightening its monetary policy while USD/JPY gives back some of its recent gains amid a weaker US dollar.

​EUR/USD trades in near one-month highs

EUR/USD has risen above its $1.1137 mid-March high and is fast approaching the 55-day simple moving average (SMA) at $1.1199 in the wake of the highest German inflation reading since 1990 at 7.3%, putting the European Central Bank (ECB) under pressure to start tightening its monetary policy.

Further up resistance sits at the $1.128 mid-February low.

Minor support comes in between the January low, 10 and 17 March highs at $1.1137 to $1.1122. Slightly further down sits the 24 February low at $1.1107.

EUR/GBP trades in three-month highs above the £0.8478 to £0.8458 support zone

EUR/GBP’s swift ascent has taken it to a three-month high at £0.8512 earlier today on the back of renewed buying interest in the Euro as markets continue to price in tighter monetary policy conditions.

The cross is likely to revisit the £0.8478 to £0.8458 support zone which incorporates the February and mid-March highs as well as the 200-day SMA. As such it is expected to hold today. If not, the late January high at £0.8422 would be back in the frame.

Above today’s high at £0.8512 lies the late December high at £0.8554.

USD/JPY continues to give back recent gains

On Monday USD/JPY briefly overshot the June 2007 high at ¥124.13 and rallied to ¥125.10, to not far below the June 2015 peak at ¥125.85, before giving back some of its recent gains on the back of a weaker US dollar, due to the slightly better Ukraine/Russia backdrop.

The cross became increasingly overbought as it had risen by over +8% since the beginning of March as the Bank of Japan (BoJ) re-iterated its dovish stance despite inflation hitting 3-year highs while the US Federal Reserve (Fed) is seen hiking rates by 50 basis points (bp) at the next two Federal Open Market Committee (FOMC) meetings to contain sky-high US inflation.

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