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EUR/USD rise crippled by strong US inflation data, EUR/GBP and GBP/JPY weaker

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EUR/USD, EUR/GBP and GBP/JPY under pressure post 40-year high in US inflation.


EUR/USD once again weighs on its support line and is likely to slide further

Yesterday EUR/USD briefly shot up to a three-month high at $1.1495 before US consumer price index (CPI) data came in well above market forecasts of 7.3% at a 40-year high of 7.5% in January of 2022, reversing the currency pair’s uptrend.

EUR/USD thus did a fourth ‘return to point of breakout’ in as many days by slipping to the breached 2021-to-2022 downtrend line and 20 January high at $1.1389 to $1.1369. In case of further downside being witnessed, the 55-day moving average (MA) at $1.1326 would be targeted.

The January and current February highs at $1.1482 to $1.1495 now offer solid resistance.

EUR/USD chartSource: IT-Finance.com

EUR/GBP is likely to decline further still

EUR/GBP now trades below the 55-day simple moving average (SMA) at £0.8424 with it slipping back towards the £0.84 mark and the November trough at £0.8381 on slightly better than expected UK month-on-month gross domestic product (GDP) and industrial production data.

Immediate resistance can be spotted at the £0.8422 late January high and above it at the mid-January £0.8454 low.

EUR/GBP chartSource: IT-Finance.com

GBP/JPY rally stalls at the October peak

Yesterday GBP/JPY broke through its four-month resistance line at ¥157.55 and briefly rose above the January peak at ¥157.77, close to the October high at ¥158.22 which provoked failure, though.

Despite today’s pullback, the late January uptrend remains intact. A rise above the October high at ¥158.22 would push GBP/JPY to a 5 ½ year high and open the way for major resistance at ¥162.61 to ¥163.87 to be reached. It encompasses the June and August 2009 highs, February 2014 low and the March as well as May 2016 highs and as such may stall the advance when first tested.

Overall bullish pressure should be maintained, while the early February high and one-month support line at ¥156.51 to ¥156.05 underpin.

GBP/JPY chartSource: IT-Finance.com

Axel Rudolph | Market Analyst, London
11 February 2022
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