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EUR/USD, EUR/GBP and USD/JPY encounter headwinds

EUR/USD and EUR/GBP rallies are taking a breather, so does USD/JPY.

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​EUR/USD does a ‘return to point of breakout’

Last week’s strong bullish trend reversal and rally in EUR/USD in the wake of the European Central Bank’s (ECB) hawkish stance has taken it to the January peak at $1.1482 which capped.

Today a ‘return to point of breakout’ is seen with the cross slipping back towards the breached 2021-to-2022 downtrend line at $1.1407. Below it, the late November and December highs at $1.1386 to $1.1382 may act as support as well as the mid-point of Thursday’s ‘body’ of its long bullish candle at $1.1368. The ‘body’ shows the distance between the open and the close of a candle.

The January and current February highs at $1.1382 to $1.1383 will need to be exceeded for EUR/USD to make further headway, with the October and 5 November lows at $1.1513 to $1.1529 being eyed in this scenario.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

EUR/GBP’s strong rally stalls post BoE and ECB meetings

Last week EUR/GBP formed a double bottom following its strong rally, triggered by the ECB president Lagarde’s hawkish comments alluding to the possibility of a rate hike later this year.

The rally through the three-month downtrend line and above the January peak at £0.8422 bodes well for the bulls, with the 200-day simple moving average (SMA) at £0.8515 remaining in focus. First a slip back towards the 55-day SMA, January high and 23 December low at £0.8424 to £0.8416 may ensue, though. This support zone is expected to underpin.

​Today, minor potential resistance sits at last week’s £0.847 high.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

USD/JPY falters below the two-month resistance line at ¥115.46

USD/JPY (大口) bounce off the 55-day SMA at ¥114.42 last week took it to ¥115.43, marginally below the two-month resistance line at ¥115.46 which caps for now.

If bettered, the November peak at ¥115.52 and the late January high at ¥115.68 would be targeted, a rise above which would put the early January high at ¥116.35 back on the map.

Good support below the ¥114.97 mid-November high sits between the one-month support line, 55-day SMA and 2 February low at ¥114.46 to ¥114.16 with further support coming in at the 8 December high at ¥113.96.

Major support lies between the mid-to-late January lows at ¥113.48 to ¥113.47.

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

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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