EURUSD continued to head lower on the last trading day of the week. The rallying Dollar exerted intense selling pressure on the Euro. The highly anticipated U.S. CPI report came in red hot at 8.6% yearly. The benchmark U.S. 10-year Treasury yield shot above 3.1% as market participants priced in a possibility of a further interest rate hike by the Fed. The ECB’s Thursday meeting did not add confidence to the Euro as the central bank is only committed to a 25 basis point interest rate increase and lowered economic guidance for the rest of the year.
On the technical side, EURUSD has dropped below our previously estimated support level of 1.06477 and is heading towards 3-year lows. Support levels for EURUSD now sit near the 1.05031 price region, which is a 2017 low. RSI for the pair sits at 39.93, entering oversold territory. On the four-hour chart, EURUSD is trading below its 50, 100, and 200-day SMA.
GBPUSD fell sharply on the last trading day of the week as the dollar rallied. The red hot U.S. CPI report propelled the U.S. 10-year Treasury yield above the 3.1% level. On Thursday, British Prime Minister Boris Johnson announced a proposed tax cut for households in an attempt to boost the British economy; however, the British Pound failed to gain traction. Market participants will closely watch next week’s FOMC meeting.
On the technical side, GBPUSD has dropped below our estimated support level at 1.24539 and is pounding towards the following near-term support level at 1.21996. RSI for Cable sits at 38.26, as of writing. On the four-hour chart, GBPUSD currently trades well below its 50, 100, and 200-day SMA.
USDJPY rose on the last day of the trading week as the Dollar index rallied past the 104 level. The U.S. CPI data came in at 8.6%, year over year. With inflation continuing to run high, market participants are pricing in possibly more aggressive interest rate hikes by the Fed. Next week’s FOMC should guide the interest rate trajectory for the rest of the year.
On the technical side, USDJPY has risen near our estimated resistance level at 134.56. RSI for the pair has risen to 67.05 and once again entered the overbought territory. On the four-hour chart, USDJPY is trading above its 50, 100, and 200-day SMA.
Support: 133.5, 132.5
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