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EUR/USD, GBP/USD and USD/JPY all come under pressure

Risk aversion has gripped markets, and is being felt in forex markets as the euro and sterling weaken against the dollar.

EUR/USD drifts lower

There is no definite sign that EUR/USD will begin even a brief rebound, but it is true that the straight line decline since the beginning of February has slowed, with the price barely eking out a new lower low yesterday.

A short-term bullish wedge seems to have formed, with a move above $1.084 and through $1.085 sending the signal that some near-term upside is possible. Alternatively, a fresh decline through $1.082 would revive the downward move.

GBP/USD creates new lower low

A possible turn lower in GBP/USD seems to be at hand, as the price continues to decline after topping out at the end of last week at $1.305.

Having fallen below Friday’s low at $1.30, the price has broken the sequence of higher lows, and may now continue to decline, targeting $1.295, $1.29 and then $1.287. Alternatively, a recovery above $1.30 revives the bullish view.

USD/JPY turns down again

The USD/JPY price continues to come under pressure, although it has so far avoided a move below ¥109.55 and the lower bound of the recent range.

However, trendline resistance from the June 2015 high capped gains last week, and yesterday’s bounce ran out of steam at ¥110.00. Therefore, we wait for a break out of these levels to define the next bigger move.

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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