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Dollar declines unlikely to last for EUR/USD, GBP/USD, and USD/JPY

US jobs report weakens the dollar, with EUR/USD and GBP/USD gaining as USD/JPY takes a step back.

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​EUR/USD attempting to regain ground after jobs report

EUR/USD saw a strong end to the week, with the US jobs report providing a pop for the pair. Despite that rise, we still remain within a clear bearish trend, where a rise through the $1.1884 level would be the first signal that things are starting to turn.

If we did break the $1.1884 level, it would simply look to provide a short-term rebound to retrace the wider sell-off from $1.1975. With that in mind, a bearish outlook holds, with a rise through $1.1884 required to signal even a short-term continuation of Friday’s move higher.

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

GBP/USD rebounds into Fibonacci resistance

GBP/USD has similarly regained ground in the wake of Friday’s US jobs report, with the price rising back into the 76.4% Fibonacci resistance level. The downtrend remains intact unless the $1.40 handle breaks, although a push above $1.3873 would bring about a potential wider retracement of the $1.40 to $1.3731 sell-off.

Unless the $1.3873 breaks, there is a good chance that we see this pair turn lower once again from here. A move below 80 on the stochastic could provide one signal that momentum is shifting in favour of the bears once more.

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

USD/JPY decline brings fresh buying opportunity

USD/JPY has been on the back foot since Friday’s peak, with the dollar decline driving the pair towards the 61.8% Fibonacci support level.

With the pair continuing to trend within a pattern of higher highs and higher lows, there is a good chance we will see the bulls come back into play before long. With that in mind, a bullish position holds unless price falls back below the ¥110.42 swing low.

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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