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

The dollar is coming back into strength, with EUR/USD mimicking the GBP/USD sell-off seen earlier in the week. Meanwhile, USD/JPY has broken through the key resistance level.

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.
Dollar and pound
Source: Bloomberg

EUR/USD rebounding after sharp sell-off

EUR/USD suffered at the hands of a strong dollar, with the pair breaking below the crucial $1.0719 support level. This confirms it was GBP/USD leading the way when we were seeing mixed messages across the markets earlier this week.

The current rally looks like a short-term one, set within a wider move lower. A bearish outlook is in play unless we break through the $1.0773 swing high. The wider trend looks like we may have bottomed out, with the current pullback likely to find support between $1.0652 and $1.0592 (61.8-76.4%). As such, we should see further downside, with any short-term rally to be sold into.

GBP/USD rebounds into fib retracement

GBP/USD managed to gain ground overnight, following a sharp pullback earlier in the week. Given that the initial pullback dragged the pair below the $1.2424 swing low, we are looking at this current rally as a short-term move to be sold into.

It has so far managed to reach the 61.8% Fibonacci retracement and we could see the pair turn lower from here. Any further upside would be seen as a better selling opportunity until we see a break back above $1.2616.

USD/JPY breaks through crucial resistance level

USD/JPY has managed to rally through the key ¥111.59 resistance level overnight, completing an inverse head and shoulders in the process. The fact this has happened means we are likely to see a more protracted move higher to retrace some of the sell-off seen earlier in the month.

As such, while the price remains above ¥110.71, a bullish short term outlook is in play. Watch out for Fibonacci support, with the 50% in particular coinciding with the Wednesday night peak of ¥111.45.

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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.