On Wednesday (October 23) during the European trading session, the US dollar index maintained its upward trend, closing at 104.5330, an increase of 0.45%. Most major currencies remain weak against the US dollar. The following is an analysis of three currency pairs: GBP/USD, EUR/USD, and USD/JPY.

GBP/USD down for four consecutive weeks

The pound/dollar has been declining for four consecutive weeks, gradually falling below the 1.3000 mark for the first time since August last year. The currency pair recently hit a new low of 1.2943, with technical indicators reflecting a sustained willingness to sell. However, the long-term support trend line formed at the bottom of 2022 (currently around 1.2950) provides some protection for a broader upward trend.

If the closing price falls below 1.2950, it may suppress market sentiment and cause the euro to fall again towards the 200 day moving average (SMA) of 1.2800, especially if it falls below the 50% Fibonacci retracement level of 1.2863 in the April September uptrend. More losses may stop near the Fibonacci level of 61.8% at 1.2730, and may even extend towards the low point of 1.2663 in August. If this trend continues, the currency pair may approach the upward line near the October 2023 low of 1.2555.

On the contrary, if the GBP/USD successfully recovers from 1.3000, its next target may be around the 20 day and 50 day moving averages of 1.3120, as well as the 23.6% Fibonacci level of 1.3160. If these resistance levels are successfully broken, the euro may accelerate towards its August high of 1.3265.

In summary, although the GBP/USD is currently showing a bearish trend, there may be some rebound at the long-term support level of 1.2950, which makes traders wary of potential momentum shifts.

EUR/USD falls below the medium-term uptrend line

The euro/dollar fell below the medium-term uptrend line, hitting a new low in nearly three months and falling below the key integer level of 1.0800. The currency pair fell 3.8% after rebounding from the resistance level of 1.1215, and the technical oscillation indicator continued its negative momentum. Technical indicators indicate that the downward trend may be losing momentum.

If the market falls further and bears break through the long-term uptrend line and support level of 1.0775, they may turn a broader bullish outlook into a bearish one, hovering around the key levels of 1.0665 and 1.0600.

In a positive scenario, if the closing breaks through the 200 day simple moving average (overlapping with the resistance of 1.0870), it may push traders towards the resistance level of 1.0950. If it continues to rise, the psychological barrier of 1.1000 may hinder the upward trend.

In short, the short-term outlook for the euro/dollar has been very negative since the end of September. However, if it successfully falls below the long-term upward trend line, it may turn the overall positive outlook into a negative outlook.

USD strengthens, USD/JPY climbs to three-month high

Driven by the strengthening of the US dollar and the rising yield of US treasury bond bonds, the US dollar/yen exchange rate soared to a nearly three-month high, hitting 151.79. The favorable macroeconomic data in the United States, as well as expectations for the upcoming US election and sustained demand for safe haven assets, have supported the appreciation of the US dollar.

With the upcoming general election this weekend, the political landscape in Japan is full of uncertainty. Preliminary polls indicate that the ruling Liberal Democratic Party may lose its majority, exacerbating concerns about political stability and the future direction of the Bank of Japan's monetary policy. This political uncertainty further weakens the prospect of the yen/strong dollar rebounding.

The current environment suggests that in this situation, the Bank of Japan is unlikely to intervene effectively. The market expects that any intervention attempts will be futile in the face of the current strong demand for the US dollar. The fate of the Japanese yen currently largely depends on the outcome of the Japanese election and the subsequent actions of the Bank of Japan, especially in terms of interest rate decisions.

The US dollar/Japanese yen established a narrow consolidation range around 150.85 and broke through the 153 level upwards. A potential MACD indicator supports a bullish pattern, with a signal line far above zero and sharply rising, indicating strong upward momentum.

It is expected that the US dollar/Japanese yen will enter a correction phase towards 150.85, with the initial correction target set at 151.70. The random oscillator further emphasizes this potential pullback, with its signal line above 80 but preparing to drop to 20, indicating that a downward adjustment is imminent before further upward movement.