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EUR/USD bounce to be short-lived, while GBP/USD holds firm and USD/JPY retracement halts for now

The euro managed a small bounce against the dollar, while the greenback is attempting to recover after a recent run of losses against the yen.

EUR/USD’s brief bounce may not last

Relief that the European Central Bank (ECB) did not pick a more aggressive inflation target gave the EUR/USD pair a small lift yesterday, reversing most of the losses of the past two days.

But the bearish view remains intact, unless the price can move back above $1.19 in coming sessions, when a more guardedly bullish view may develop. Sellers will be looking for a new move to the downside that takes out $1.18.

GBP/USD stabilising around recent low

The past week has seen GBP/USD dips below $1.376 find buyers, therefore, preventing any further downside.

Now the buyers need to step up and push the price back above $1.385, in order to firmly establish that a low has been created. The bearish view remains on ice until the price drops back below $1.374.

USD/JPY recovers around 50-day SMA

The USD/JPY’s retreat from the July high has carried it back to the 50-day simple moving average (SMA) at ¥109.80, with a dip below this finding buyers yesterday.

At present this looks like a retracement in the uptrend, which remains intact. A move below ¥109.50 would begin to negate this view, but for now a continued bounce from a higher low seems a likely development.

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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