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

Both EUR/USD and GBP/USD rallies look to be under pressure. However, USD/JPY is expected to turn lower despite this current move higher.

EUR/USD falls back within consolidation phase

EUR/USD has failed to really take advantage of yesterday’s break higher, with the pair moving back into the $1.1255 support level overnight.

This could be a precursor to further gains, with a break below that $1.1255 support level required to negate the bullish outlook currently in play. Alternately, a rally through $1.1284 would provide a renewed bullish signal.

GBP/USD rally fails to hold

Overnight gains for GBP/USD are looking at risk of being reversed, with the pair looking likely to post a bearish engulfing pattern. This pair is hugely reliant upon today's EU27 meeting for guidance, with a failure to provide an extension to Article 50 likely to drive substantial downside for the pound.

However, in all likeliness we will see an extension granted, taking much of the near-term risk off the table. That should be good for the pound. Thus, while we could see short-term weakness, it looks likely that we will see the bulls come into play before long. A break below the $1.298 region would be required to bring about a wider bearish picture.

USD/JPY grinds higher, yet further losses seem likely

USD/JPY is gradually regaining ground after the sharp decline seen yesterday.

That break below ¥111.21 added greater confidence to the bearish story, with the current rally expected to be a short-term retracement. As such, this rise looks like a selling opportunity, with a rally through ¥111.60 required to negate the bearish outlook.

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