Outlook on EUR/USD, EUR/GBP and USD/JPY post Fed but ahead of ECB and BoE meetings
Outlook on EUR/USD, EUR/GBP and USD/JPY post Fed but ahead of ECB and BoE meetings.
EUR/USD trades in six-month highs ahead of ECB rate announcement
EUR/USD surged to $1.0695 as the US Federal Reserve (Fed) slowed its pace of rate hikes by raising the fed funds rate by a widely anticipated 50 basis points (bp) to 4.25%-4.50%, following four consecutive 75 bp hikes previously. Borrowing costs have thus risen to their highest level since 2007.
Ahead of Thursday’s European Central Bank (ECB) meeting at which a 50 bp rate hike to 2.50% is forecast the pair may consolidate slightly below the $1.07 mark. Support can be found between the $1.0595 early December high and the two-month uptrend line at $1.0585.
Above Wednesday’s high at $1.0695 lies the $1.0774 to $1.0787 zone, made up of the May and June highs.
EUR/GBP remains above key support ahead of BoE rate decision
EUR/GBP keeps hovering above its £0.858 to £0.8548 key support area, made up of the mid- to late October and early December lows as well as the 200-day simple moving average (SMA) ahead of Thursday’s Bank of England (BoE) and ECB rate decisions. Both central banks are expected to raise rates by 50 bps, the former to 3.50% and the latter to 2.50%.
The cross so far stays below its November-to-December downtrend line at £0.8607 and Wednesday’s high at £0.8617. If bettered, last and the previous week’s highs at £0.8646 to £0.8675 would be eyed.
A drop through the early December low and the 200-day SMA at £0.8552 to £0.8548 would put the mid-August high at £0.8512 on the cards.
USD/JPY flirts with 200-day simple moving average amid Fed rate hike
USD/JPY continues to trade sideways around its 200-day SMA at ¥135.46 amid Wednesday’s FOMC 50 bp rate hike, with the cautious Gross Domestic Product (GDP) projections and hawkish consumer price index (CPI) forecasts also having an effect on the US dollar.
While the early December and Wednesday’s lows at ¥134.52 to ¥133.63 underpin, a recovery back towards the ¥137.68 to ¥137.97 mid-November low and last and this week’s highs may ensue. While the cross remains below the late November ¥139.89 high, the October-to-December downtrend remains intact, however.
A fall through ¥133.63 would lead to the ¥131.74 mid-August low being in sight.
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