Bank of Japan and FOMC announcements bring significant volatility for the dollar, with EUR/USD and GBP/USD breaking higher. Will this continue or are we seeing a reversal back onto the long-term downtrend?
EUR/USD turns lower from Fib resistanceEUR/USD pushed into the key $1.1246-$1.1279 resistance zone, with the pair subsequently turning lower yesterday. This is likely to mark the top for this market, given the bullish connotations of a move through $1.1284.
As such, while we could see further short-term upside, this is expected to be fleeting, with a break back below the overnight low of $1.1193 providing confirmation of the reversal back onto the long-term downtrend.
GBP/USD could be due another rallyGBP/USD has managed to break through the key $1.3091 swing high; the first time the pair has created a new higher high this month. This could pave the way for another leg higher despite the bearish medium-term outlook.
With that in mind, we will be looking at how price reacts to the $1.2987 support level. Ultimately, we would need a break back below $1.2946 to bring the bearish view back into play and until that happens, we could see another leg higher off the back of yesterday’s break higher.
USD/JPY in recovery phase following sell-offUSD/JPY is moving higher, following on from the Bank of Japan fueled move lower on Wednesday. The key thing to note is the pair remains within a downtrend, with our multi-month descending trendline holding up once more.
As such, this current move higher is perceived as an opportunity to get short at a better price. Ideally, we would see a move into ¥101.98 or ¥102.15 to provide a good risk/reward ratio.
