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FX levels to watch – EUR/USD, GBP/USD, USD/JPY, USD/CAD

After initial sharp moves lower for GBP/USD and EUR/USD yesterday, the dollar soon lost out across the board. Will we see early dollar gains hold or falter once more?

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
EUR/USD currency pair
Source: Bloomberg

EUR/USD rallies despite radical ECB easing
Mario Draghi must be waking up wondering what he has to do to devalue the euro, with EUR/USD breaking higher despite initial losses. Interestingly, those initial losses didn’t break through $1.0808 support, yet the resulting bounce broke $1.1059 resistance – certainly a bullish move.

We are seeing the pair pullback this morning and are therefore looking for a support to instigate further gains. The obvious area of support would be the zone between the 38.2% retracement of $1.1067 and the key previous resistance of $1.1059.

As such, while the short-term looks like we could see an extension of this pullback, another move back towards $1.1218 seems likely before long.

GBP/USD breaks to new high
GBP/USD also rallied despite early weakness upon the European Central Bank (ECB) release yesterday. This means we now have a more convoluted picture, with higher highs and lower lows.

However, given the recent uptrend and gradual retracement this morning, another leg higher seems likely. As such, a closed hourly candle above $1.4291 would provide a renewed bullish short-term view for the pair with initial resistance at yesterday’s highs of $1.4317. Key initial support is likely around $1.4230.

USD/JPY ranging after Fibonacci response
USD/JPY has been trading between ¥112.18 (61.8% Fibonacci retracement) and ¥114.55 over the past two weeks. Yesterday saw the pair rally heavily at first, only to sell-off once more. Ultimately, it seems worthwhile waiting for a break out of this range before we gain any solid direction.

Thus we will be looking for bearish intraday reversal signals with any price action in the ¥114.25-114.55 zone. Conversely, bullish reversal signs around ¥112.18 should be noted. A breakout would be signaled with a closed hourly candle above ¥114.55 or below ¥112.18.

USD/CAD sells off from SMA once more
Wednesday’s move below C$1.3262 pointed towards a continuation of the downtrend that has been in play over recent weeks. On both Wednesday and Thursday, we saw the 50-period simple moving average (four-hour) provide crucial resistance to send the pair lower.

We are currently seeing the pair respond to the C$1.3262 support level. Given the fact this sell-off has already significantly progressed, the risk/reward profile of any shorts do not seem worthwhile. Thus while a bearish view is in play, it makes more sense to short into rallies, with the 50-period in particular marking a notable resistance point.

A break through C$1.4357 would negate this bearish view. Key support levels in the meanwhile are C$1.3262, C$1.3228 and C$1.3121.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.