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

Dollar weakness has been a key driver, with EUR/USD rising, while USD/JPY sells off. Meanwhile, EUR/GBP has seen significant selling, with the pair hitting a major support zone.

EUR/USD retraces after recent rally

EUR/USD is pulling back, after a week of gains that took the pair into a three-year high. This recent breakout from consolidation brings us back into the primary uptrend.

So far, this morning’s retracement has taken us into the 76.4% Fibonacci level. This is expected to bring about bounce, with a drop below $1.2384 required to negate this short-term uptrend. That being said, be aware that with the European Central Bank (ECB) meeting due today, there is a significant chance that Mario Draghi will seek to devalue the euro, raising the likeliness of short-term volatility.

EUR/GBP falls into crucial support zone

EUR/GBP has sold off sharply into the £0.8689 support level this week, with the price moving into the double top downside target.

This double top projection is coupled with the December low, and a descending trendline from late September to form a highly notable area of support for this pair. The wider descending channel context means we are likely to turn higher once more in the near future and, given the significance of this support zone, it is worth noting that we could see some form of reaction at this level. Should the price break £0.8689, there is the bottom end of the channel to contend with, around £0.8655.

USD/JPY rebounds after substantial sell-off

USD/JPY is seeing some marginal gains this morning, as the pair attempts to regain ground off the back of a substantial move lower thus far this week.

The ¥109.47 level is going to be key here, with a break through there pointing towards further upside. Until that happens, another move lower looks likely before long. 

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