EUR/USD, EUR/GBP and USD/JPY await outcomes of this week’s central bank meetings
Are EUR/USD, EUR/GBP and USD/JPY primed for this week’s plethora of FED, BoE and BoJ rate decisions? What do the charts say?
EUR/USD holds above its $1.0806 multi-year low ahead of FOMC
EUR/USD revisited but so far held above Friday’s $1.0902 low, ahead of this week’s US Federal Reserve (Fed) meeting which is expected to kick off a new cycle of rate hikes with an anticipated 25 basis point increase in the target fed funds rate.
Failure at $1.0902 would probably lead to last week’s low at $1.0806 being back in the spotlight.
While $1.0902 underpins, however, a gradual advance back towards the January low and last week’s high at $1.1121 to $1.1122 may ensue. Together with the two-month downtrend line at $1.1165 this area is likely to cap the upside, though. Further up meanders the 55-day simple moving average (SMA) at $1.127.
EUR/GBP consolidates below its four-month downtrend line ahead of BoE rate decision
Last week’s EUR/GBP sharp rally off its current March low at £0.8203 has taken it all the way back to its four-month downtrend line at £0.8436 as the pound sterling took a beating caused by increased sanctions on Russian oligarchs in the UK and worries on the impact this may have on the British economy.
Since then, the cross has been trading sideways between the 55-day SMA at £0.8362 and last week’s £0.8436 high whilst awaiting this week’s Bank of England (BoE) rate decision with an expected third rate hike to 0.75% already being priced in.
Should the £0.8436 high be overcome, the February peak at £0.8478 would be in focus, together with the 200-day SMA at £0.8482. Minor support can be seen along the breached February-to-March resistance line, now support line, at £0.8354. Further potential support is to be found around the 24 February low at £0.8306.
USD/JPY rockets to 5-year highs ahead of US and Japanese central bank meetings
USD/JPY trades in 5-year highs as worries about mounting inflationary pressures in the US following last week’s strong consumer price index (CPI) reading leads investors to price in the beginning of a new US rate hike cycle at Wednesday’s Fed meeting with the Bank of Japan’s (BoJ) stance likely to remain dovish at its meeting on Friday.
Last week’s break out of its 2022 ascending triangle put the December 2016 peak at ¥118.66 on the map. The next higher minor psychological ¥120.00 region may also be reached in the weeks ahead.
Previous resistance at the ¥116.34 January and February highs, because of inverse polarity, should now act as support.
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