EUR/USD drops to 6 ½ month low, EUR/GBP flirts with July peak and USD/CNH continues to rise
Outlook on EUR/USD, EUR/GBP and USD/CNH as rising yields help greenback appreciate even further still.
EUR/USD drops to 6 ½ month low
Rapidly rising US yields, especially in the long end, helped the US dollar appreciate further, pushing EUR/USD down to a 6 ½ month low at $1.0576, remaining on track to reach the January and March lows at $1.0516 to $1.0484.
Minor resistance can be spotted at Thursday’s $1.0617 low and more important resistance between the May low and mid-September low at $1.0632 to $1.0636.
EUR/GBP flirts with July peak
EUR/GBP continues to flirt with its £0.8701 July peak which capped the cross on Friday and Monday, just below the 200-day simple moving average (SMA) at £0.8712. While it isn’t overcome, a slide back towards the middle of the currency pair’s June-to-September sideways trading range may occur. For this to happen, a fall through Monday’s low at £0.8669 would need to be seen on a daily chart closing basis.
In this scenario the late June peak at £0.8658 could be reached ahead of the mid-September £0.863 high.
Were the last few weeks’ advance to continue and take EUR/GBP above the 200-day SMA at £0.8702, the March low at £0.8719 would be in sight, together with the April low at £0.873.
USD/CNH remains cautiously bullish
USD/CNH’s sell-off from its 11-month current September high at CN¥7.3681, made marginally below its October 2022 peak at CN¥7.3773, has taken it back towards its early September low at CN¥7.2392, to its CN¥7.2596 mid-September trough, before gradually rising again.
Hawkish Federal Reserve (Fed) member Kashkari’s speech on Monday, in which he expects one more rate hike to be seen, has helped the US dollar appreciate even further, despite its ten consecutive straight weeks of gains.
A rise above last week’s high at CN¥7.3214 would put the August and September highs at CN¥7.3497 to CN¥7.3681 back on the map. Immediate upside pressure should be maintained while the cross stays above Monday’s CN¥7.2946 low. Below it the July-to-September uptrend line can be spotted at CN¥7.287.
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