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

Last week’s 'v-shaped' price action in the dollar has dominated the FX space. Will GBP/USD, EUR/USD and USD/JPY carry on where they left off?

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.
Euro and dollar notes
Source: Bloomberg

EUR/USD attempts to regain lost ground
​The pair saw a sharp sell-off at the end of last week. With last week's rally always looking like a retracement of May’s sell-off, this move lower was bound to happen sooner or later.

As such, any ground made up this morning could be fleeting, for another move lower seems likely before long. With that in mind, a bearish view is in play, with a closed hourly candle above $1.1321 needed to negate this view. Key support levels are $1.1232, $1.1217 and $1.1137, with resistance at $1.1321 and $1.1418.

GBP/USD consolidates after sharp sell-off
​The pair saw a massive sell-off on Friday, as the fear of a Brexit and a resurgence in the dollar combined to create the perfect storm. Price action is currently consolidating, with a breakout expected to provide directional bias for the short-term.

Given the trend coming into this pattern, another leg lower seems the likeliest eventuality. An hourly close below $1.4158 would provide a likely spark for another move lower, with $1.4090 the next key support level.

Alternatively, an hourly close above $1.4228 would be expected to create a period of upside, with $1.4280 and $1.4299 the next near-term resistance levels.

USD/JPY pushing towards key support level
Thursday's rally in USD/JPY proved short-lived, with the pair breaking to a 40-day low today. The ¥105.55 support level looks likely to be reached before long, which would create a new 20-month low should it occur.

However, for now we are seeing a bounce in USD/JPY as equity markets begin to stabilise. This is likely to be a short-term retracement and thus the Fibonacci retracement levels are worth watching for potential resistance.

As such, we could see short-term upside, yet the long-term downtrend is expected to return to the fold once more in the near future. Key resistance levels are ¥106.29, ¥106.46 and ¥106.63, with support at Y105.74.

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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.