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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 – GBP/USD, EUR/USD, USD/JPY

Much will depend this week on what the Federal Reserve does, with major potential ramifications for the US dollar. 

GBP/USD
Source: Bloomberg

GBP/USD dependent on article 50

A potential activation of article 50 this week offers the chance of volatility in sterling, at least in the short-term. We have seen the pullback in GBP/USD begin to slow, with a possible base of support being formed around $1.2150.

A rally into the 200-hour simple moving average (SMA) of$1.2231 has pushed the pair to its highest level in around a week. A breakout from here could see $1.2366, and then the 50-day SMA at $1.2384 tested. A break of $1.2150 would be needed to reassert bearish momentum, potentially opening the way for a move below the $1.20 level again.

EUR/USD to hold or not to hold?

The $1.0640 resistance zone for EUR/USD highlighted last week appears to have been broken, and having edged lower, we are now waiting to see if the $1.0680 peak from the second half of February can hold.

A move above here would open the way to another test of $1.08, last seen at the beginning of February. It would take a move back below $1.0640 to suggest the pair is about to retest the $1.05/$1.0520 area.

USD/JPY awaiting the Fed meeting

The direction of USD/JPY will depend largely on the Fed meeting on Wednesday. We saw a spike higher though last week, taking out the mid-February and early March highs just below ¥115.

The drop back on Friday saw the price bounce off the 100-hour SMA (¥114.53) and, with the pair still heavily oversold intraday, a bounce could be in the offing. Nonetheless, the weakening of the bullish momentum could hand the advantage to the bears, with a close below ¥114 signaling a loss of upward momentum.  

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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