The market mood in the New York session remains positive, carrying on the mood from the Asian and European sessions. US equities are recording gains between 1% and 2.67%.
On Tuesday, the EUR/JPY surged above the 50-day moving average and the head-and-shoulders neckline in the 134.95-135.25/35 area, threatening to invalidate the chart pattern. In the near term, the bias, which shifted to neutral-upwards, as of writing is upwards.
With that said, the EUR/JPY’s first resistance would be 137.00. Break above would expose 138.00, followed by May 9 swing high at 138.32. On the flip side, the EUR/JPY first support would be 136.00. A breach of the latter, the next support would be the head-and-shoulders neckline around 135.25-35, followed by April’s 27 daily low at 134.77.
On the other hand, The dollar fell for a third straight day on Tuesday, pulling back from a two-decade high against a basket of major peers, as an uptick in investors’ appetite for riskier bets diminished the U.S. currency’s appeal.
Upbeat earnings views from Home Depot (NYSE:HD) and United Airlines along with optimism around the easing of China’s crackdown on tech and COVID-19, helped to lift risk sentiment.
The U.S. Dollar Currency Index, which tracks the greenback against six major currencies, was down 0.7% at 103.41, its lowest since May 6. The index hit a two-decade high last week supported by a hawkish Federal Reserve and worries over the global economic fallout from the Russia-Ukraine conflict.
Elsewhere, The British Pound soared on Tuesday, buoyed by broad-based U.S. dollar weakness, but more importantly, strong UK economic data. In late trading during the New York session, GBP/USD was up 1.3% to 1.2482, posting its largest single day rally since October 2020.
Earlier today, UK employment figures showed that the country added 83,000 workers in February, beating expectations for a net increase of 5,000 jobs handsomely. With this result, the unemployment rate fell 3.8% to 3.7%, hitting its lowest level in nearly half a century.
GBP/USD rebounded from 1.2250, the 2022 low, rising above 1.23. The bullish crossover on the MACD is keeping buyers hopeful of more upside.
Bulls will look to retake 1.2410, the April 28 low, before 1.25, the 20 SMA, and then 1.2635, the May high.
Failure to retake resistance at 1.2410 could see the price rebound lower, back below 1.23. A fall below 1.2155 is needed to create a lower low.