Dollar weakness key for EUR/USD, GBP/USD and USD/JPY

Fed rate cut expectations see the dollar slump across EUR/USD, GBP/USD and USD/JPY.

EUR/USD continues to surge higher

EUR/USD gains are ramping up, with the sharp declines in global markets now driving expectations that the Fed could cut rates by up to 100-basis points at their meeting this month.

The recent breakout from a long-standing downtrend has been further confirmed with the rally through 1.1412 resistance. Further gains are highly likely, with the ECB response unlikely to match that of the Fed. Therefore, a bullish outlook remains in place unless we see a break below Friday's low of 1.1286.

GBP/USD breaks resistance with further gains likely

Much like GBP/USD, any bearish sentiment has gone out the window following a break through some major resistance levels.

On this occasion, the rise through 1.3018 and 1.3069 has brought about a new bullish theme, with further upside looking likely. The next major resistance level is 1.3210, with a rise through that level bringing about another bullish breakout signal. A bullish outlook is thus in play here, with a break below today’s low of 1.3035 required to negate this view.

USD/JPY plummets into fresh three-year lows

Haven demand has seen USD/JPY slump into the 102.00 region, bringing a fresh three-year low. This is unlikely to be the last of this move, with further losses looking highly likely given the mix of Fed expectations and risk-off sentiment.

With the hourly chart highlighting a short period of consolidation prior to this next move lower, we could perhaps utilize that 103.07 level as an area to place stops when looking for further downside. However, with the prior lows yet to be taken out, we would ultimately need to see the 105.74 level breached to bring about a less bearish outlook.

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