GBP/USD, EUR/CHF and USD/JPY Forecasts – Risk Continues to be Fluid

GBP/USD Technical Analysis

The British pound has rallied quite nicely against the US dollar during trading on Wednesday as yields initially plunged in the US dollar but have recovered a bit. So, this is something that we have to watch. There is talk of a potential ceasefire in the Middle East; I think that helps the pound quite a bit.

But we are approaching the 200-day EMA and while we are stretched, I suppose if there is 1 currency that I think could do fairly well against the US dollar, it would more likely than not be the British pound because of interest rates being higher in the UK. So, in a weak dollar environment, I like the pound; in a strong dollar environment, I probably pass on this potential move to the upside.

EUR/CHF Technical Analysis

The euro has dropped against the Swiss Franc, which is interesting, but when you look at the daily chart, you can see we did test the 200-day EMA, so maybe this is more of a technical move than anything else. A pullback from here could open up a move down to the 50-day EMA at the 0.9150 level, an area that I think would be a big floor in the market.

Interest rate differential continues to favor the Europeans; I think that remains the case, and therefore it’s difficult to get overly bearish here unless, of course, we get some type of major event in the Middle East that has everybody running for cover. On top of that, we have the Swiss National Bank that has stated multiple times it will intervene if things get out of control, so I remain bullish buying dips.

USD/JPY Technical Analysis

The US dollar has dropped against the Japanese Yen a bit during the early part of the session, but the 158 Yen level is where I think the real support comes into play. It’ll be interesting to see if that does, in fact, hold as support; if it does, then I think we’ve got a real shot at perhaps continuing the longer-term uptrend.

The 50-day EMA sits below there and is turning to the upside, so I think that’s also a potential support level as well. The interest rate differential pays you to hold this pair to the long side every day, and with that, I remain bullish, but I also recognize that the 160 Yen level is a massive barrier.