EUR/USD, GBP/USD, and USD/JPY continue to be driven by dollar strength

Dollar strength remains a key factor for FX markets, with EUR/USD, GBP/USD weakness coupled with sharp USD/JPY gains.

EUR/USD declines unlikely to end here

EUR/USD continues to lose ground as traders favour the dollar and the US recovery story. The current candle highlights a stabilization that is occurring, yet upside is likely to be short-term in nature.

Immediately above we have a dashed trendline, with a break through that point required to bring a wider retracement into play. Should that occur, we have the confluence of a wider descending trendline and the $1.1805 swing-high to contend with. Thus, until we start taking out key resistance levels such as $1.1805 and $1.1947, any near-term upside looks to be a potential selling opportunity for EUR/USD.

GBP/USD attempting to regain ground from Fibonacci support

GBP/USD is regaining ground from the 76.4% Fibonacci support level this morning ($1.3711). The wider uptrend certainly comes under greater pressure if we see the pair fall back below the $1.3566 swing-low, with things seemingly stabilizing for now.

As such, whether we attempt to rebound from this Fib level or break below $1.367 should give us a good idea of where we go from here. With the stochastic moving up through the 20 threshold, there is a good chance we could see short-term gains to steady the pair around a new area of consolidation.

USD/JPY surge breaks key resistance levels

USD/JPY has been surging higher over the course of the past week, with the latest move higher taking price up through a confluence of the 200-week simple moving average SMA, 76.4% Fib resistance, and the June 2020 peak of ¥109.85.

From a long-term perspective, we are still in a downtrend, with a break up through the ¥112.23 level required to end that. However, the recent break through that cluster of resistance goes a long way in telling us that we could be on course to ending the multi-year downtrend.

The four-hour chart highlights this impressive drive higher, with further gains looking likely. A decline through ¥109.37 would point towards a wider pullback coming into play. However, further upside does look likely from here, with any short-term pullback looking like a buying opportunity.

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