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EUR/USD, EUR/GBP mixed while USD/JPY stalls amid highest Tokyo CPI reading since April 2019

EUR/USD and EUR/GBP continue to trade sideways in low volatility while USD/JPY pauses its steep ascent in 6-year highs.

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Loss in volatility is seen in the EUR/USD cross

EUR/USD continues to trade sideways below its two-month downtrend line at $1.1051 as investors remain cautious about the latest developments of the Russia-Ukraine war which is now in its second month.

A slip through this week’s low at $1.0961 would target the mid-March $1.0901 low, a fall through which would lead to the $1.0806 early March low being back in play.

While the cross remains below last week’s high at $1.1137, this year’s downtrend remains valid.

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

EUR/GBP recovery ongoing after UK March GfK consumer confidence hits 16-month low

EUR/GBP is seen heading towards the 55-day simple moving average (SMA) and 11 March low at £0.8361 as UK March GfK consumer confidence came in weaker than expected at -31, its weakest level in 16 months, amid mounting concerns about surging inflation, higher interest rates and the ongoing war in Ukraine. This compared to -26 in February and an expectation of -30 for March.

Furthermore, UK month-on-month (MoM) retail sales surprised to the downside by dropping to -0.3% versus an expected +0.6% and +1.9% previously which pushed the EUR/GBP exchange rate higher.

Resistance above the 55-day SMA can be spotted between the 16 February and 25 February highs at £0.8402 to £0.8408. Support remains to be seen in the £0.8305 to £0.8286 region which held in January and February.

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

USD/JPY stalls at resistance after three weeks of sharp gains

USD/JPY is heading for its third week of sharp gains and has so far risen to ¥122.43 as the Bank of Japan (BoJ) sticks to its dovish stance despite inflation hitting 3-year highs while traders price in potentially aggressive rate hikes by the US Federal Reserve (FED).

In the wake of yesterday’s Tokyo Core year-on-year (YoY) consumer price index (CPI) rising at its fastest pace since April 2019 to +0.8%, the currency pair stalled marginally above the ¥122.20 January 2007 high. A minor retracement may thus be seen over the coming days but could be used as an opportunity to enter a long trade.

Minor support below the 22 March high at ¥121.41 comes in around the psychological ¥120.00 mark. Were this week’s high at ¥122.43 to be exceeded, the November 2015 peak at ¥123.75 would be eyed next, ahead of the June 2015 peak at ¥125.85.

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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