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

The dollar is easing back after the Bank of Japan decision overnight, with EUR/USD and GBP/USD strengthening amid USD/JPY weakness.

Pound and dollar
Source: Bloomberg

Will EUR/USD rally break through Fibonacci resistance?

Yesterday saw EUR/USD sell-off from the 76.4% retracement, providing a clue that we could be due a pullback in the coming days. This morning we are seeing early strength, pointing towards a potential rally back up to that Fibonacci resistance.

Whether or not we see price break through the $1.1115 level will dictate the state of play, as this would be a warning sign that we could be due to move onwards to the key $1.1165 level.

As such, a bearish view remains in place with a more neutral outlook should we see a break through the $1.1115 level. 

EUR/USD

Can GBP/USD continue early strength?

IN_GBPUSD also saw a strong move lower yesterday from the $1.3217 Fibonacci resistance level. Once more, the ability to break above that 76.4% retracement would provide us with a key idea as to whether there could be enough in the tank to send the pair lower.

For now, a bearish view remains in place, with a break above the $1.3217 level required to provide a more neutral view. However, a break through $1.3249 would be required to truly make any dent in the view that we will soon see the pair selling off once more. 

GBP/USD

USD/JPY weakness likely to continue

Yesterday’s wedge rally in IN_USDJPY proved a good time to exit the market ahead of such a key event risk. Ultimately the rub of the green worked out in favour of our bearish overall view, sending the pair below the key ¥104.00 support level. This is likely to spark interest in further downside, yet it is worthwhile being cautious and awaiting retracements for short positions.

Given the size of the weakness overnight, any such retracement can be substantial. As such, while a bearish view persists, it pays to be selective when choosing where to enter once more. Given the long lower shadows on recent hourly candles, there is a good chance we could see this market stage a short-term rally before selling off once more.

USD/JPY

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