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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 weakness is driving markets at present, as geopolitical concerns rise. A break below key support for USD/JPY is particularly noteworthy.

Euro and dollar notes
Source: Bloomberg

EUR/USD looking strong

Further gains reinforce the impression that euro bulls have returned. The recovery yesterday of the rising daily trendline underscores this point.

EUR/USD still needs to take out $1.0635 on the intraday charts to create a new higher high, but the signs look good. Above $1.0635 the next target would be the $1.0680/$1.07 area. A bigger move higher would still target the 200-day simple moving average (SMA) at $1.0850. Only a close below $1.0570 negates this bullish outlook.

GBP/USD facing a test

The longer-term narrowing wedge that prevails here is about to be tested once again, with the possibility that further sterling strength will push GBP/USD to the descending trendline, around $1.0565. 

USD/JPY dropping

The drop below ¥110.11 would likely point towards much greater downside from this point onwards. The possibility is that USD/JPY will drop to the 200-day SMA at ¥108.70, or even down to ¥107.45, the high from July.

It would need a recovery back above ¥110.11 to reverse the bearish outlook, and even then a move back above ¥112 would be needed to create a new higher high on the short-term charts. 

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

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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