EUR/USD and GBP/USD rally while USD/JPY slumps in wake of Powell testimony

Fed chairman Jerome Powell has cleared the way for a rate cut this month, and his dovish testimony has pulled the rug out from underneath the dollar.

EUR/USD rebounds from $1.12

EUR/USD has rallied from $1.12, finding support in this area as the dollar weakened following Federal Reserve (Fed) chair Jerome Powell’s testimony. Further gains above $1.13 reinforce the bullish view and open the way to $1.14.

A bearish view would argue that the price, having fallen below trendline support at the end of last week, will now run into resistance at the same trendline. A failure to recover $1.128 would suggest more losses to come.

GBP/USD risks creating a lower high

GBP/USD too managed a strong rally from the low at $1.245 but already the price is running out of steam, and may provide a selling opportunity if a lower high is created around $1.253.

A fresh push lower would target $1.245 in the near term. Further gains head towards $1.259, which was both support and then resistance during the early part of July.

USD/JPY gets Powell-d

USD/JPY has also fallen below rising trendline support, and now a rebound to ¥108.40 may provide a selling opportunity. Further declines head towards ¥107.50.

A recovery above ¥108.40 would clear the way to another push to ¥109.00, the high seen yesterday before Powell’s testimony. At present the low seen overnight is a higher low compared to the early-July low, so some bullish momentum may emerge from here.

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