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

Recent dollar strength comes into question with EUR/USD, GBP/USD and USD/JPY all seeing losses for the greenback. However, with EUR/USD reaching a key resistance and USD/JPY expected to turn higher, such dollar weakness could be fleeting.

Dollar notes and Japanese yen
Source: Bloomberg

EUR/USD rallying within broadening formation
The pair has seen yet another sharp rally this morning, following on from the big move higher yesterday afternoon. It is clear that as this week progresses, volatility is rising to create a broadening formation.

These patterns are invariably difficult to trade. However, the key here is the ability to break through both trendline (1.1323) and horizontal resistance (1.1339) to continue the creation of higher highs.

It is worth bearing in mind that this pair has been trending lower throughout April and thus the longer term outlook portrays a market which could turn lower once more rather than break through the 1.1396 level. With that in mind, a bearish outlook would be preferred around around the 76.4% level at 1.1355, where a break through 1.1397 negates this expectation for the market to turn lower in the near future. 

EUR/USD daily chart

GBP/USD turns higher once more
The pair is once more moving higher, following support from an inside trendline. Recent sterling strength has been so consistent that very few pullbacks seem to occur. Thus many will have seen this early weakness as an opportunity to enter.

Ultimately, we continue to create higher highs and higher lows. Thus a break through yesterday’s high of 1.4639 seems likely, where the next resistance level would come at 1.4668. This bullish view holds unless we see an hourly close below 1.4514 which would subsequently look towards 1.4459 as the next key support.

GBP/USD daily chart

USD/JPY drifts lower, but further gains expected
The pair saw a break higher yesterday, following a pull back to the 76.4% retracement yesterday. The subsequent creation of a new intraday high pointed towards a resurgence for the pair, with a move back towards Friday’s high of 111.84 seemingly on the cards.

However, be aware that with the BoJ meeting looming, some hesitancy and irrational market moves could happen due to repositioning ahead of that major risk event. Key support levels of note are at 110.66 and 110.28, whereas resistance is likely at 111.50 and 111.84.

USD/JPY daily chart

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