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EUR/USD and GBP/USD in retreat as USD/JPY rallies

Dollar strength post-FOMC is bearing down on the euro and sterling, but has given the greenback a new lease of life against the yen.

EUR/USD suffers sharp fall

The Federal Reserve (Fed) meeting gave the dollar a lift and has driven EUR/USD to its lowest level since the second half of April.

The sellers do appear to have the upper hand, although the downward move now faces challenges at $1.194 and $1.188. Below this the April low at $1.17 comes into view. A recovery back above $1.19 might spell the beginning of at least a short-term bounce.

GBP/USD retracement potentially limited?

The losses have been somewhat more measured here, but GBP/USD has fallen out of the trading range of May and June, towards the 100-day simple moving average (SMA) at $1.1937.

This remains within the broader uptrend, however, with previous higher lows in the $1.37/$1.38 area yet to be challenged in any meaningful way. Dip buyers will be on watch for a recovery above $1.402 and the 50-day SMA that could spell another move higher.

USD/JPY rallies after FOMC meeting

Jerome Powell has finally given USD/JPY the boost it needed, as the pair rallied to a higher high on changed expectations regarding Fed policy.

The April peak at ¥110.96 is now back in sight, while the bounce from the June low at ¥109.16 remains in place and leaves the buyers firmly in charge.

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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