EUR/USD, GBP/USD and USD/JPY all drift lower from Friday highs
After Friday’s rallies, EUR/USD, GBP/USD and USD/JPY have all moved lower, although bullish momentum may soon revive.
EUR/USD pauses after gains
EUR/USD has continued to rally, but remain firmly in a downtrend. On the daily chart, the failure to break above the 50-day simple moving average (SMA) on Friday might be regarded as a bearish sign, but would need a daily close back below $1.10 to provide further confirmation.
At present, the daily moving average convergence divergence (MACD) and stochastics continue to rise, suggesting bears might want to hold their fire for now. Bulls will be looking to the hourly chart, where an oversold reading for stochastiscs highlights a possible entry point, as a higher low is created. Further gains target $1.106, the high from Friday.
GBP/USD edges back from Friday peak
The euphoria of last week has given way to some caution for GBP/USD, as the realisation dawns that the EU and UK still remain far apart on any deal. However, the firm rally through $1.26 and to $1.27 might suggest that a new uptrend has been created, if the dip to $1.22 earlier in the month marks a higher low.
In the short term, the pullback from Friday’s high might provide another buying opportunity, with a target of Friday’s peak of $1.27 and possibly higher. A move back below $1.25 would begin to dent the bullish impression.
USD/JPY continues breakout
Friday saw the USD/JPY break firmly above the short-term descending channel, but gains for now have stalled below ¥108.50, as they did twice in September.
However, if the pullback from Friday’s peak provides a buying opportunity, we could see another attempt to break ¥108.50, providing a more bullish view if this occurs. This would then take the price on to ¥109.40 and the 1 August high. A fresh bearish view requires a move back below ¥107.50.
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