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

EUR/USD weakness looks set to continue, while USD/JPY continues to be content with a major resistance level. Meanwhile, despite likely short-term gains for USD/CAD, a bearish reversal seems to be in the offing.

Pound coins and dollar notes
Source: Bloomberg

EUR/USD continues to trend lower

The EUR/USD sell-off continues, with price breaking below the crucial $1.0985 support level. A bounce this morning points towards some form of retracement, yet as long as we do not see an hourly close above $1.1058, then a bearish view remains in place.

Downside support comes in at $1.0952 and $1.0912, which are key lows from June and July. Near-term resistance would likely be found at the $1.1000 handle, alongside Fibonacci retracements.

EUR/USD chart

USD/JPY continues to resist upward breakout

IN_USDJPY has been repeatedly contending with the ¥104.32 resistance level over the past week, following a period of appreciation earlier in the month. The ability to break through and away from ¥104.32 is crucial to providing us with a bullish medium-term outlook for the pair.

As such, the state of play will be determined by the reaction around these levels. A break below ¥103.36 would provide a more bearish view, whereas an hourly close above ¥104.50 would give us confidence that another leg higher is on the cards.

USD/JPY chart

USD/CAD rally unlikely to last

USD/CAD is rallying after a key failure to break to a new high, followed by the creation of a new low (below $1.3140). With price trading within a rising wedge pattern, this points towards the current rally likely failing once more and the pair moving back towards the lower end of this pattern.

For the short-term, there is a good chance of upside, given that reversals often see deep retracements. However, shorts are preferred from a deep retracement (preferably 70% or 76.4%), where a bearish view remains unless we see price break and close above $1.3307.

USD/CAD chart

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