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Risk-Off Boosts Greenback, GBPUSD Extends Declines Below 1.2600

FOREX
  • Despite the late Monday rally on Wall Street, a broad risk-off feel remains present in markets, with core yields off their highs and equity indices reversing course to within close proximity of Monday’s poorest levels.
  • This price action in bond and equity markets has continued to see market participants flock to both the US dollar and the Japanese Yen with the DXY rising 0.52% and extending its impressive rally above 102.
  • Monday’s pullback in EURJPY suggests the cross has entered a corrective phase. Further weakness during today’s session (-1.01%) saw the pair breach support at 136.35, the 20-day EMA, signalling scope for a deeper pullback. This could expose key trend support at 134.36, Apr 8 low.
  • Euro and GBP weakness is prevailing approaching the APAC crossover with EUR/USD edging ever closer to the intra-day 1.0642 low as well as looking susceptible to key support at the 2020 low of 1.0636.
  • A break below there would mark a five year low for the pair with support moving down to 1.0496, the 0.764 projection of the Feb 10 - Mar 7 - 31 price swing.
  • GBPUSD also continues its downward slide, exacerbated by the breach of the September 2020 lows at 1.2676 and most recently breaching the 1.26 mark, down 1.1% on Tuesday. Support for cable moves down to 1.2495, the 61.8% retracement of the Mar 2020 - Jan 21 bull leg.
  • The overnight session will focus on Australian CPI before a particularly light global data calendar ahead of Thursday’s Bank of Japan April meeting.
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