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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% 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.

EUR/USD tentatively holds at multi-year support while EUR/GBP and GBP/JPY also stabilise

EUR/USD tries to stabilise above its January 2017 low with EUR/GBP and GBP/JPY also holding ahead of this week’s UK unemployment, inflation, and retail sales data.

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​EUR/USD tries to stem its slide

Last week EUR/USD dropped to $1.035 amid worries of a looming recession and the interest rate differential between the European Central Bank’s (ECB) and the US Federal Reserve’s (Fed) monetary policies. The cross dropped to a level last seen in January 2017 and by over 15% from its 2021 Covid-19 pandemic peak, before levelling out.

The fact that the currency pair stabilised has probably come as no surprise to technical traders since multi-year key support seen between the March 2015, December 2016, and January 2017 lows at $1.0463 to $1.0341 is deemed to withstand the first test. Having said that, the downtrend remains firmly entrenched and as long as the early May high at $1.0642 isn’t overcome, the $1.035 to $1.0341 area is expected to eventually give way with the major psychological $1.00 mark, or parity, then being targeted.

Minor resistance above the 28 April low at $1.04723 comes in along the one-month resistance line at $1.05 and also at Thursday’s $1.0529 high.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

EUR/GBP stabilises above 200-day simple moving average (SMA) ahead of UK data

EUR/GBP’s decline off last week’s £0.8618 high earlier today found support at £0.8472, not far above the 200-day SMA at £0.8446, ahead of this week’s UK unemployment, consumer price index (CPI) and retail sales data.

While the £0.8472 to £0.8446 support zone holds, a rise back towards the early and mid-May highs at £0.8591 to £0.8618 is on the cards.

Were this resistance area to be overcome, the September peak at £0.8658 and also the late May and July 2021 highs at £0.8669 to £0.8671 would be next in line.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

GBP/JPY decline looks to have ended at last week’s low

The slide in GBP/JPY seems to have ended at last week’s ¥155.61 low ahead of this week’s unemployment, CPI and retail sales data releases.

From a technical point of view an Elliott Wave zig-zag correction, also called and a,b,c correction, may have ended at last week’s ¥155.61 low now that a brief rise above Friday’s ¥158.51 high has been seen. If so, a continued advance should eventually take the cross to above its April ¥168.43 peak.

For this scenario to become more probable a rise and daily chart close above the one-month downtrend line at ¥160.86 should ideally take place this week with the wave ‘b’ high at ¥164.25 representing the next upside target. A drop through the current May trough at ¥155.61 would invalidate the bullish technical set-up and probably provoke a resumption of the recent descent towards the December-to-May uptrend line at ¥152.46.

GBP/JPY chart Source: IT-Finance.com
GBP/JPY chart Source: IT-Finance.com

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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