EUR/USD and GBP/USD drop while USD/JPY rallies on stronger US dollar
Outlook on EUR/USD, GBP/USD and USD/JPY following weak French and German flash PMI and Thursday’s BoE 50 basis point rate hike.
EUR/USD reverses trend around $1.1000 mark
EUR/USD’s rally to its six-week high at $1.1012 has been short-lived with the cross not only slipping through its June uptrend line at $1.0922 but also the 55-day simple moving average (SMA) at $1.0885 as French and German flash purchasing managers indices (PMI) for June come in worse-than-expected.
A potential downside target is the 22 May high at $1.0832 below which lies the $1.08 region. Resistance above the 55-day SMA lies at Tuesday’s $1.0892 low.
GBP/USD slips despite BoE 50 basis point rate hike
GBP/USD briefly shot back up towards last week’s $1.2848 14-month high as the Bank of England (BoE) hiked its rates by 50 basis points (bp) for a thirteenth time to 5.00% but then came off again as investors started to fret about the impact these hikes might have on the UK economy.
The breached one-month uptrend line at $1.2749 acted as resistance on Friday morning with Wednesday’s low at $1.2692 being back in sight. If slid through, the $1.2679 May peak which may offer support. If not, a drop back towards the $1.2599 to $1.2544 early- to mid-June highs may unfold.
USD/JPY rallies in seven-month highs
USD/JPY continues to surge higher as Japanese inflation unexpectedly falls. The annual inflation rate declined to 3.2% in May with core inflation also slipping to 3.2%.
The cross has now overcome its the late November 2022 peak at ¥142.25, which may act as minor support, and is seen heading up towards the ¥145.00 region. Minor support below ¥142.25 lies at this week’s low at ¥141.22 and at the ¥140.93 May peak.
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