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Dollar under pressure for EUR/USD, GBP/USD and USD/JPY

Positive market sentiment is hurting the dollar, with EUR/USD, GBP/USD gaining ground, as USD/JPY hits a seven-month low.

EUR/USD rallies back towards key resistance

EUR/USD has been on the rise, as risk-on sentiment seen throughout global markets help to improve the outlook for this pair. The key resistance level up ahead comes in the form of the $1.188 peak from late-October.

The price action seen over the past two months appears to be trading within a consolidation phase, with the rally from $1.1612 bringing us back into the top end of that range. As such, while we could move higher in the short term, a break through the $1.188 level would be required to signal further upside to come.

GBP/USD rallies back into key resistance level

GBP/USD has similarly been in a consolidation mode over the course of the past month, with the failure to break below $1.2861 accompanied by the continued respect of the $1.3141-$1.3177 resistance zone.

With the pair back into that resistance zone, the reaction from here will be telling in driving future price action. As such, watch for a potential breakout or reversal from here to gauge GBP/USD sentiment.

USD/JPY tumbles from trendline resistance

USD/JPY saw sharp declines in the wake of the election, with the rally into trendline resistance ultimately bringing a swift move into a fresh seven-month low. That continues a year-long downtrend, with further weakness likely in the future.

For today, we are looking at the potential for a rebound if the stochastic breaks up through the 20 threshold. Ultimately, any rebound would be deemed as a short-term phenomenon within a clear downtrend. Thus whether or not a short-term retracement comes into play, a bearish outlook is in play unless we rise through the ¥105.34 swing high.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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