Risk-off moves push EUR/USD, GBP/USD and USD/JPY lower
Continued caution among traders has put EUR/USD, GBP/USD and USD/JPY on the back foot.
EUR/USD slumps below $1.04
Further dollar strength comes with EUR/USD, as Jerome Powell restates his view that the Federal Reserve (Fed) will hike rates by 50 basis points (bp) at its next two meetings, although he added it may do more. As a result the pair has seen further declines, dropping below $1.04. having already fallen below $1.05 this week. The lurch lower this week puts new strength into the downtrend, which has been running for over a year.
GBP/USD hovers around $1.22
GBP/USD has dropped below $1.24 and $1.23 over the past week, and overnight it tested $1.22. As with EUR/USD, the comments made by the Fed chair regarding further tightening have put new strength into the US dollar, and suggest that we will see additional downside here. This move lower puts $1.208 into view, a level not seen since May 2020. As with EUR/USD, there is little sign of a any meaningful bounce developing.
USD/JPY retracement gathers pace
Yesterday’s fall in USD/JPY may mark the beginning of a bigger drop, which may open the way to ¥127.00 or even the 50-day simple moving average (SMA) at ¥124.49. The broader rebound in risk appetite overnight does not appear to be reflected in this pair, which may point towards the transitory nature of any bounce in stocks.
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