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EUR/USD rallies, as GBP/USD pushes above recent highs and USD/JPY bounce stalls

The dollar’s recent strength is fading, and as a result EUR/USD and GBP/USD are picking up, while the surge in USD/JPY is fading.

EUR/USD rebounds from 100-day SMA

EUR/USD has finally found the strength to move higher, after reaching the 100-day simple moving average (SMA) at $1.1966 last week.

In early trading today it has managed to push on above trendline resistance from the January peak, and combined with another bullish stochastic crossover, it looks like a broader move higher is underway, targeting $1.22 and then on to $1.235. The longer-term uptrend has reasserted itself, so a move back below the 100-day SMA is needed to reverse the outlook.

GBP/USD clears recent highs

GBP/USD has already seen a breakout to new highs, as its current uptrend reasserts itself after the brief drop last week.

The rebound back above $1.36 last week, and the further gains seen since them, put the buyers firmly back in control, negating the bearish view forming with Thursday’s drop towards the rising 50-day SMA.

USD/JPY falls below ¥105

There will be questions over whether the bounce of USD/JPY from the January low has now run its course, after the reversal at the 200-day SMA (¥105.59).

Of course, the uptrend from the beginning of the year is intact, and even a decline towards ¥104.00 would still create a higher low, although a drop below the mid-January high around ¥104.40 would begin to raise questions about a revival of the longer-term move lower. A rebound back above ¥105.00 and then above ¥105.50 would mark a more bullish 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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