EUR/USD and GBP/USD rally while USD/JPY retreats

The euro has rallied following better economic data yesterday, while GBP/USD is back to the highs of the past two months.

EUR/USD rallies to mid-November high

While other markets sold off yesterday, EUR/USD rallied, returning to the $1.109 high from mid-November.

A close above this level would mark a bullish development, coming after the double bottom around $1.099. Further gains target $1.115 and the highs from the end of October, along with the 200-day simple moving average (SMA) at $1.1164. A more bearish view requires a move below $1.099, which might then open the way back to the September low below $1.09.

GBP/USD back to recent highs

A steady progression of higher lows in the GBP/USD price over the past two weeks has provided entry points for fresh longs.

The price itself has returned to the $1.297 highs that has held since mid-October. We have yet to see a firm breakout, but with daily stochastics rising we could be watching a momentum shift in favour of the buyers. $1.30 and $1.32 come into play if the price can finally break higher.

USD/JPY falls towards 200-day SMA

The turn in risk sentiment yesterday has been reflected in USD/JPY which fell back towards the 200-day SMA (¥108.89) yesterday.

We have seen negative divergence between price and stochastics since September, with the price making new higher highs which are not reflected in stochastics, but overall the trend higher has been quite resilient. An overnight bound to ¥109.20 is being faded this morning, and a move back below ¥108.90 would break yesterday’s low and bring ¥108.25 into play. If the price can move back above ¥109.20 then a more short-term bullish view may develop, with the highs at ¥109.70 coming into play.

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