Dollar under pressure for EUR/USD, GBP/USD and USD/JPY

Positive market sentiment is hurting the dollar, with EUR/USD, GBP/USD gaining ground, as USD/JPY hits a seven-month low.

EUR/USD rallies back towards key resistance

EUR/USD has been on the rise, as risk-on sentiment seen throughout global markets help to improve the outlook for this pair. The key resistance level up ahead comes in the form of the $1.188 peak from late-October.

The price action seen over the past two months appears to be trading within a consolidation phase, with the rally from $1.1612 bringing us back into the top end of that range. As such, while we could move higher in the short term, a break through the $1.188 level would be required to signal further upside to come.

GBP/USD rallies back into key resistance level

GBP/USD has similarly been in a consolidation mode over the course of the past month, with the failure to break below $1.2861 accompanied by the continued respect of the $1.3141-$1.3177 resistance zone.

With the pair back into that resistance zone, the reaction from here will be telling in driving future price action. As such, watch for a potential breakout or reversal from here to gauge GBP/USD sentiment.

USD/JPY tumbles from trendline resistance

USD/JPY saw sharp declines in the wake of the election, with the rally into trendline resistance ultimately bringing a swift move into a fresh seven-month low. That continues a year-long downtrend, with further weakness likely in the future.

For today, we are looking at the potential for a rebound if the stochastic breaks up through the 20 threshold. Ultimately, any rebound would be deemed as a short-term phenomenon within a clear downtrend. Thus whether or not a short-term retracement comes into play, a bearish outlook is in play unless we rise through the ¥105.34 swing high.

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