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EUR/USD and GBP/USD hold up while USD/JPY falls back following FOMC meeting

FX markets have seen EUR/USD edge back and USD/JPY come under pressure, while GBP/USD has held steady in the wake of a possible agreement between the UK government and its MPs.

EUR/USD turns back towards $1.17

A stronger dollar has pushed EUR/USD back from the highs of the week, but already some buying pressure is coming into play as the price nears the $1.17 area that has marked support since the end of July.

A more bearish view requires a close below this level, while a failure to accomplish this leaves the current range-bound outlook intact. Bulls will want to see a move through the lower high of $1.19 created this week and then back towards $1.20, the peak from the end of August.

GBP/USD still heading higher

News of a possible agreement between the government and rebel members of parliament (MPs) helped GBP/USD move back towards $1.30 yesterday, although we have seen some weakness overnight following the Federal Open Market Committee (FOMC) meeting and a stronger dollar.

However, short-term trendline support from last Friday’s low remains intact for now. Further gains target $1.30 and then $1.304, while a drop back below $1.29 could signal the beginning of a broader bearish view once again.

USD/JPY hit by vague Fed and more optimistic BoJ

USD/JPY found itself in the middle of a tussle between two central banks. The Federal Reserve (Fed) opted not to provide more detail on how its new average inflation targeting (AIT) policy would work, while the Bank of Japan’s (BoJ’s) upgraded economic assessment meant the dollar weakened and the yen rose.

The net effect has been to push the pair through a cluster of support levels to ¥104.80, the lowest level since the end of July. Further declines target ¥104.20 and the lows from the end of July, with the longer-term downtrend having reasserted itself.

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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