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GBP/USD continues downward trend
Having hurtled through the April trendline and the 50-day simple moving average ($1.5523) yesterday, cable has continued to move downwards, with further declines today pushing it through the 200-day SMA. Some support is possible around $1.54, but if this is lost then the next target becomes the 100-day SMA at $1.5273.
At present we continue to expect further downside, given the bearish aspect to both the daily relative strength index and daily stochastics, with a turnaround back above $1.5522, the 50-day SMA, to reverse the picture.
EUR/USD could target $1.1178
It appears that EUR/USD is going through an outbreak of optimism, as it continues to hold above $1.10 for yet another day. For now the picture has yet to turn bullish, but if we can succeed in gaining a daily close above the $1.11 level the situation may change significantly.
I will be watching for a bullish crossover in daily stochastics to reverse the bearish outlook, with an initial target at $1.1178, the 50-day SMA, which would clear the way to another test of the $1.15 area that proved to be such a barrier during the course of May and June.
AUD/USD could move towards 2006 low
Overnight moves higher stalled at the $0.7450 level, which coincides nicely with the 50-hour EMA, and overall the picture remains bearish. Intraday rallies will continue to be sold, particularly if the market interprets today’s Federal Reserve minutes in a hawkish fashion.
Continued moves lower will risk a move in the direction of the 2006 low around $0.7030.
USD/JPY eyes ¥118.80
Heavy losses in the past few hours have resulted in the currency pair moving below the 50-day SMA (¥122.29). The 100-day SMA at ¥121.06 is a short distance away, which may provide some support, but a more realistic proposition is support around the ¥118.80 area.
Hourly rallies should provide the ideal opportunity for more selling, with a move higher likely to encounter resistance at ¥122.