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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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

Dollar strength has started to unravel with Donald Trump’s mention of an overvalued dollar. Could we be seeing a turnaround for the likes of the GBP/USD and EUR/USD?

Pound and dollar
Source: Bloomberg

EUR/USD moving into Fibonacci resistance

EUR/USD has continued its ascent, with the pair continuing to create new intraday highs following yesterday’s rally through $1.0685. Current resistance is being provided by the $1.0710 level (January 2016 low), with the pair looking likely to continue its ascent.

However, there are two ways of looking at this. One is that we have seen a bottom for the pair, coming at the lower bounds of a two-year range. With that in mind, there is a possible resurgence on the cards for a move back into the $1.1500 region as we saw in 2016. Conversely, we are moving into the 70% and 76.4% retracement, which could cap the recent resurgence and send the pair lower once more.

The rising wedge we are currently seeing points towards the potential for such a pullback. However, until we negate the creation of higher highs and higher lows, the first scenario continues to look a possibility.

EUR/USD

Will GBP/USD follow up yesterday’s rally?

GBP/USD has managed to break through the crucial $1.2315 resistance level yesterday, in what was an incredible day for the pound. Yesterday’s trendline break, accompanied by the $1.2315 break looks as though it could pave the way for a more bullish period for the pair.

However, we would need to see a break through $1.2433 to raise the likeliness of a bullish phase for the pair. For now, we are likely to be in a retracement phase, yet given the steep rise yesterday, any positions will be difficult and thus it makes sense to await a break back above $1.2433 or below $1.1986.

GBP/USD

USD/JPY continues to trend lower

USD/JPY has been in a relatively consistent trend lower over the two weeks, with this morning’s rally moving into trendline resistance once more.

The key here is the ability to remain below the ¥114.28 resistance level. Should that occur, then further losses seem likely for the recent downtrend to continue. The next key support level to watch comes in at ¥111.44.

USD/JPY

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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.

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