EUR/USD, GBP/USD and USD/JPY rise further as banking woes abate
Outlook on EUR/USD, GBP/USD and USD/JPY as risk-off sentiment abates.
EUR/USD is gradually heading back up again
EUR/USD's sharp fall from last week’s $1.0929 high amid worries surrounding Deutsche Bank’s double-digit fall in its share price, leading to flight-to-quality flows into the US dollar, pushed the cross to Friday’s low at $1.0714, to marginally below the 55-day simple moving average (SMA) at $1.0738, before recovering since.
Monday’s better-than-expected German income from operations (IFO) business climate data for March helped EUR/USD recover further still with it now trading back above its $1.0804 mid-February high towards last week’s high at $1.0929. The German business climate indicator rose to 93.3 in March - its highest level since February 2022 - versus 91.1 in February.
Minor support below Monday’s $1.0801 high comes in along the two-week uptrend line at $1.0771 ahead of the 55-day SMA at $1.0738
GBP/USD is gunning for last week’s high at $1.2343
GBP/USD has resumed its ascent towards Thursday’s $1.2343 high ahead of US consumer confidence, wholesale inventories, home price and goods trade balance data releases, all out on Tuesday.
A rise above Thursday’s high at $1.2343 would put the December and January highs at $1.2446 to $1.2448 on the map which represent strong resistance. Support below Friday’s $1.2288 high can be spotted along the one-month uptrend line at $1.2252 which sits right within the 24 January low and mid-February high at $1.2263 to $1.227.
Only a currently unexpected bearish reversal to below Friday’s low at $1.2191 would void our short-term bullish outlook and put the 55-day SMA at $1.2158 back on the cards.
USD/JPY recovers from seven-week low
USD/JPY’s descent amid risk-off sentiment due to the banking crisis last week took it to a seven-week low at ¥129.65 before the cross stabilised as risk-off sentiment abated.
A speech by the Bank of Japan (BoJ) Governor Haruhiko Kuroda and core Consumer Price Inflation (CPI) coming in at a less-than-expected 2.7% in March versus an expected 3.0% and 3.1% in February also helped USD/JPY recover intraday.
While Tuesday’s intraday low at ¥130.51 underpins, Monday’s high at ¥131.76 is likely to be revisited, a rise above which would engage the 55-day SMA at ¥132.36. Support below ¥130.51 sits at Friday’s ¥129.65 near two-month low.
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