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

The dollar seems to be back in style, with EUR/USD and USD/JPY in particular seeing sharp moves in the favour of the greenback. Can this trend continue?

Euro and dollar notes
Source: Bloomberg

EUR/USD plummets through support
The pair took a surprising turn lower yesterday, following what looked like a textbook upside flag breakout. However, instead we saw the pair flush through both 1.1348 and crucially the 113.15 swing low too.

This brings about the possibility that we are going to see 1.1388 mark the top of this whole two month rally, should price break below last week’s low of 1.1234. For now, this consolidation seems most likely to break lower given the bearish entry.

However, with the medium-term uptrend still in play, a like-for-like rally could also be on the cards. Thus it seems sensible to await a breakout to dictate directional bias.

A closed hourly candle above 1.1306 would look for a move higher, with 1.1315 and 1.1335 the next resistance levels. Conversely, a closed hourly candle below 1.1286 would look towards 1.1273, 1.1246 and 1.1234 as the next key support levels. 

EUR/USD daily chart

GBP/USD channeling lower
The pair is gaining ground this morning, following on from a sharp pullback late into yesterday’s session. Given the creation of lower highs and lows, we are trading within a descending channel. As such, while we await a breakout from this period, it seems likely we will see sellers come back in from this rally.

As such, it is worth watching the 61.8% (1.4376) and 76.4% (1.4328) retracements as possible levels for another move lower, with 1.4321 and 1.4279 the next support levels of note. We would need to see a closed hourly candle above 1.4411 to provide a bullish breakout signal. 

GBP/USD daily chart

USD/JPY turns lower from Fibonacci resistance
The pair is turning lower from the 76.4% retracement, following a sharp rally yesterday. The pair is approaching a key support level at 109.49 which would need to be broken for further losses. Ultimately, the bearish view would come back into play with an hourly close below 109.12. Key resistance levels are 109.93 and 110.66, with support at 109.49, 109.32 and 109.12. 

USD/JPY daily chart

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