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​​​EUR/USD, GBP/USD recover from multi-week lows while USD/JPY surges ahead​​​

Outlook on EUR/USD, GBP/USD and USD/JPY amid German ZEW, record UK wage growth and solid Japan economy.

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​EUR/USD recovers from five-week low

​EUR/USD’s slide from its $1.1275 July peak has taken it to Monday’s five-week low at $1.0875 before recovering on Tuesday morning ahead of Germany’s ZEW economic sentiment publication.

​The cross may recover to the 55-day simple moving average (SMA) at $1.0948 around which it may run out of steam, though. Further up lies the minor psychological $1.10 region around which it oscillated for much of August.

​A, for Tuesday, unexpected slip through Monday’s $1.0875 low would push the $1.0834 July low to the fore, ahead of the 200-day SMA at $1.0783.

EUR/USD chart Source: ProRealTime
EUR/USD chart Source: ProRealTime

​GBP/USD bounces off six-week low on record UK wage growth

GBP/USD is seen bouncing off its $1.2617 six-week low as UK wage growth hits a record high, leaving the door open for the Bank of England (BoE) to continue on its monetary tightening path.

​Average wages excluding bonuses in the UK increased 7.8% year-on-year (YoY) in the second quarter of 2023, the most on record and significantly above expectations of 7.4%. Meanwhile, the unemployment rate edged higher to 4.2%, the highest since late 2021, while the number of job vacancies fell by 66K.

​GBP/USD is likely to revisit its 55-day SMA and also its July-to-August downtrend line at $1.2746 to $1.2764. Only a rise and daily chart close above the next higher $1.2819 high seen last week would technically indicate that a bullish reversal is taking place.

​Good support remains to be seen between the early and mid-August lows at $1.2621 to $1.2617.

GBP/USD chart Source: ProRealTime
GBP/USD chart Source: ProRealTime

​USD/JPY trades in nine-month highs despite strong Japan growth

USD/JPY is on track for its seventh consecutive day of gains and trades at levels last seen in November 2022 while aiming for the psychological ¥150.00 region.

​The continued advance in the USD/JPY pair comes despite Japan’s economy growing at a faster pace than expected in the second quarter of 2023.

​The June peak and accelerated July-to-August uptrend line at ¥145.07 to ¥144.96 should offer support.

USD/JPY chart Source: ProRealTime
USD/JPY chart Source: ProRealTime

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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