CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

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

EUR/USD and GBP/USD continue to drift lower, following a 61.8% retracement earlier in the week. Interestingly we are seeing a similar move for USD/JPY, with a 61.8% retracement leading to a morning of selling pressure.

EUR/USD weakens from 61.8% retracement

EUR/USD weakened throughout much of yesterday, following a rally into the 61.8% retracement earlier in the week. There is a strong chance that we are seeing a retracement, set within the wider downtrend.

However, with flatlining lows coming around the crucial historical $1.1554 support level, there is also a possibility that we will form a base here, with a rally through $1.1852 pointing towards a more bullish phase coming into play. As such, there is an argument for both sides, which highlights the importance of obtaining a strong risk-to-reward, or else waiting it out. A rally into the 76.4% retracement looks attractive for shorts, while the option to wait it out would mean watching for a break above $1.1837, or below $1.1508 to dictate the directional bias.

GBP/USD continues decline from Fibonacci resistance

GBP/USD has similarly been turning lower after perfectly respecting the 61.8% Fibonacci retracement level last Friday.

The wider downtrend in play points towards a likely continuation of this weakness, with a break below $1.3102 looking likely before long. A break above $1.3447 would be required to negate the downtrend that has been in play for two months now.

USD/JPY declining within gradual market turnaround

USD/JPY has followed the lead, with a 61.8% retracement leading to a market sell-off. Interestingly, despite the similarity with EUR/USD and GBP/USD, this is seeing USD weakness against the dollar, rather than strength.

This is highlighting the potential weakness for pairs such as EUR/JPY and GBP/JPY. USD/JPY has been seemingly topping out over the past fortnight, with lower highs and lows being formed. This comes into question once again, with the retracement and sell-off we are currently seeing. A continuation of that reversal comes with a fall below ¥109.36 support. This bearish outlook remains in place unless we see a rally above the ¥110.75 high. 

This information has been prepared by IG, a trading name of IG Markets 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.