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

Dollar strength dominates EUR/USD and GBP/USD trading as recent gains are unwound heavily. However, the USD/JPY rally is coming into question, with yen buyers falling away due to weakness across equities and crude this morning.

EUR/USD forex pair
Source: Bloomberg

EUR/USD tumbles heavily
EUR/USD is continuing to sell off heavily following a break below $1.1334 yesterday. While such a break was likely to result in significant losses, we have still not seen the signal needed to say the longer-term uptrend that has been in place since March is finished.

We would need a close below $1.1144 for that. Until then, the short-term bearish outlook persists, with the 76.4% Fibonacci retracement representing the final notable support level before $1.1144. As such, a short-term bearish view is held which would be expanded to a medium-term view should we break below $1.1144.

However, there is a chance of a bounce at $1.1214.

EUR/USD chart

GBP/USD rolls over as sellers dominate
Dollar strength is dominating this pair too, with IN_GBPUSD breaking below the key $1.4197 support level leading to significant losses. Further losses seem highly likely, with support levels of $1.4057, $1.4041 and $1.4005 the next in view.

However, its worthwhile being cautious entering at such a point, given how extended this sell-off is. As such, retracements higher would be seen as bearish opportunities rather than any wider bullish shift in sentiment. 

GBP/USD chart

USD/JPY rally slows
The IN_USDJPY risk-on rally is grinding higher, following the double bottom pattern completed yesterday. However, with crude and equity markets drifting lower this morning, there is a chance the yen could find a bid once more.

Fibonacci retracements have been well respected within this rally and thus it is worth watching them for possible support and resistance. The 61.8% overnight resistance highlights this.

Ultimately, this rally would only come into question with an hourly close below ¥109.02. Should that occur, ¥108.78 and ¥108.44 would be the next support levels of note. Otherwise, a closed hourly candle above ¥109.49 would provide a renewed bullish view for the short term, with the 76.4% pullback (¥109.94) the next resistance level to watch.

USD/JPY chart

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