The week has started with the US dollar on the back foot, as markets reassess the path of US rates given Friday’s weak NFP reading. 

Dollar and pound
Source: Bloomberg

GBP/USD could see 50-day SMA

The move above $1.52 continues, as the long-awaited recovery in cable finally gets underway. A continuation of this move will head towards $1.5290 and then on towards the 50-day SMA at $1.5449.

The daily RSI’s strong move higher adds to the bullish picture, and so long as the price remains above $1.52 then I expect further gains to materialise. A move back below last week’s lows around $1.51, and then through the May lows at $1.5090, would signal that the turnaround has ceased and new lows should be expected.

For GBP/USD, once $1.5090 is lost there is little support until $1.48.

EUR/USD eyes $1.13

Despite being knocked back from Friday’s highs there are still buyers here, pushing the currency pair back towards $1.1256 level that was the high water mark at the end of September. A close above here would suggest that resistance around $1.13 and then $1.1395 will be tested.

Support was found on Thursday around the 50-day SMA (currently at $1.1176), so a close below this indicator should be regarded as a bearish signal, with a downside target towards $1.11. 


The Aussie’s gentle move higher is still underway, and with the daily RSI back above 50 it looks like the buyers will remain in control.

The next target would be the $0.72 level for AUD/USD, where gains petered out in mid-September. The $0.70 level remains clear support, so bears will need to be careful until we see a close below here, when a more significant move back towards the September low at $0.69 may begin.

USD/JPY could head towards ¥121.66

Having recovered the ¥120 level, the next target for USD/JPY is the ¥120.64 level, with the 200-day SMA at ¥120.90 just above it.

A move through the 200-day would head towards the late August peak at ¥121.66.

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