Risk appetite weakens ahead of busy period for markets, weakening EUR/USD and GBP/USD, while stalling the USD/JPY rebound
Given this week’s action-packed calendar it is perhaps not surprising to see risk aversion on the rise, with losses for EUR/USD, GBP/USD and USD/JPY.
EUR/USD still under pressure
EUR/USD continues to retreat from its July highs, having reached a higher high in its move last week to $1.1275.
This leaves the uptrend intact, though a move back below the April/May highs around $1.108 might bother the bulls and suggest a move back to the 50-day simple moving average (SMA). A recovery back above $1.11 would help suggest that the buyers are back in charge.
It would need a move back below the $1.085 zone to provide an indication that more short-term weakness is in the offing. In that case, the 200-day SMA might come into play as a target/support area.
GBP/USD retracement continues
A dollar revival has weighed on GBP/USD too after its recent run higher. Losses have continued over the past two weeks, though the uptrend is intact.
Bulls will be watching for a higher low to be created in due course, similar to the price action seen at the end of June. Further declines for the moment may being the 50-day SMA into play once again.
A higher low would reinforce the uptrend, and put the price on course to target the July highs once again.
USD/JPY looks for further gains
The uptrend here with USD/JPY has been given a boost over the past week, after the pullback to ¥138.00 found buyers.
Since the low in the first half of July the price has rebounded back above ¥140.00, the 50-day SMA and ¥141.00. This puts it back on course to target the ¥144.94 highs from the end of June. Above this the price will create a fresh higher high.
A reversal back below ¥140.00 is needed to negate this view, and sellers will need a close back below ¥137.00 to suggest that the uptrend has run its course.
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