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EUR/USD at risk of declines, while GBP/USD and USD/JPY rally

EUR/USD has dropped to a two-week low, while GBP/USD and USD/JPY have continued to enjoy strong gains.

EUR/USD at risk of heavy losses

The price action over the past two weeks has carried EUR/USD back to the lows of early November around $1.10. The price has yet to break below this zone of support, but if the overnight rally from yesterday’s lows runs out of steam then we could see this level tested.

Short-term trendline resistance comes into play around $1.1015, while a bearish crossover on hourly stochastics would also provide a sell signal. For the moment, the sequence of lower highs this week provides a bearish view.

GBP/USD rallies towards one-month high

The YouGov seat projection has provided a sharp boost for sterling, helping to reverse a growing bearish impression over the past week. GBP/USD has rallied through trendline resistance from last Thursday’s highs, and has pushed above the lower high from 25-26 November.

Further gains require a sustainable breakout above $1.2976, which has held back gains since mid-October.

USD/JPY returns to key resistance

USD/JPY continues to climb, and has been the beneficiary of fresh bullish momentum over the past week. Now it must break above ¥109.55 to clear resistance and open the way to ¥110.34 and long-term trendline resistance from the September 2018 highs.

With the US out of the picture we may see some further weakness, but this is likely to be a buying opportunity unless the price breaks back below ¥108.50.

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