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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Dollar weakness drives up EUR/USD and GBP/USD while weighing on USD/JPY

While both the pound and the euro are little changed so far, the yen continues to make headway against the greenback.

EUR/USD Source: Bloomberg

EUR/USD holds firm ahead of ECB meeting

Hopes of a hawkish European Central Bank (ECB) meeting have driven EUR/USD to its highest level since early September, returning the price to the 100-day simple moving average (SMA).

The downtrend is still in place, and indeed if the ECB proves to be more cautious than expected, a reversal here could develop rapidly. This would then bring trendline support from the September low into view, and potentially back to those September lows in time.

Alternatively, the price will target $1.02 and then $1.036, the August high, in the event of additional upside.

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

GBP/USD back at $1.16

GBP/USD's resurrection from its September low continues, although it is arguably much more a function of dollar weakness than it is any renewed confidence in the British economy.

A one-month high for GBP/USD has seen the price push on above the 50-day SMA (currently $1.1387) for the first time since early August. However, it is still in a downtrend, so buyers may be cautious about pushing too hard on this for the time being.

A reversal back below $1.14 would likely be taken as a signal that a fresh leg lower is in progress, with trendline support from the September low likely to be tested in short order.

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

USD/JPY weakens for another day

Intervention by the Ministry of Finance has finally resulted in a sustained move lower for the USD/JPY, towards the 50-day SMA.

However, just as the downtrends for EUR/USD and GBP/USD are still in place for now, the uptrend here is now seriously challenged by this move. Indeed, buyers may welcome it as the first real downward move, with the potential for a higher low in due course.

Additional declines target the 50-day SMA (currently ¥143.68), and then below this down to the ¥140.00 level and the 100-day SMA (currently ¥139.54).

USD/JPY Source: ProRealTime
USD/JPY 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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