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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Continued dollar weakness drives rebounds in EUR/USD and GBP/USD, while weakening USD/JPY

The dollar is heading lower ahead of the latest US inflation reading today, driving counter-trend moves in EUR/USD, GBP/USD and USD/JPY.

EUR/USD opens the day above 50-day SMA

The latest rebound here has witnessed EUR/USD recover from the 20-year lows that we saw earlier in the month.

But the downtrend is still firmly in place, and while the price has managed to open above the 50-day simple moving average (SMA) for the first time since February, the overall bearish view has not changed. This is still a counter-trend rebound unless and until it breaches the August-high, at which point a more neutral view can be considered.

Further gains would target a move towards $1.035, while sellers will be watching for a reversal that puts the price back on a downward footing and indicates that yet another lower high has been created.

GBP/USD rebound enters a third day

Dollar weakness has given sterling space to rally against the US currency, with GBP/USD moving higher as risk appetite recovers globally.

But like EUR/USD, it will take a lot to shift the bearish view. The price has yet to reach the 50-day SMA, and the August-highs at $1.225 mark the next major level to watch. For the moment the recovery is simply a bearish rebound.

While the bounce may move beyond the 50-day SMA and $1.20, the expectation is that a lower high will be created in due course.

USD/JPY edges towards ¥142

After its fresh higher high last week, USD/JPY is dropping back, though the uptrend remains intact.

At present the pullback is only shallow, but a continued drop could go as far as the 50-day SMA (currently ¥137.10), or, as in the case of August, to the 100-day SMA (currently ¥134.37).

Nonetheless, any higher low reinforces the uptrend and points towards fresh gains. It will take a move back below the August-low to alter this outlook.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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