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

Dollar weakness has resumed in earnest, following a Trump interview that raises questions about the direction of US policy.

Dollar and euro notes
Source: Bloomberg

EUR/USD getting ready to bounce  

A bout of dollar weakness has provided the necessary tonic to suggest a longer-term bounce is at hand.

EUR/USD has firmly held the rising trendline we highlighted earlier in the week, and while some profit-taking is evident this morning following a weaker German CPI reading, as long as the price holds above $1.06 we should see further gains. The price still has to clear $1.0702, and if it does then we could see a push back above $1.08.

EUR/USD price chart

GBP/USD showing good signs

GBP/USD briefly moved above $1.2560, the high from the beginning of the month. Short-term, we may see some weakness, but two nearby rising trendlines should provide support.

A recovery above $1.2560 would then target $1.2616, the high from late March. A close below $1.2366 is needed to cancel out the bullish outlook.

GBP/USD price chart

USD/JPY in lower highs

Tuesday’s drop through key support continued unabated yesterday, and now USD/JPY finds itself nearing the 200-day simple moving average (SMA).

Some support at the weekly pivot of ¥108.81, combined with a long weekend, might result in a retracement but, as long as we fail to recoup the high from 10 April at ¥111.40, the sequence of lower highs will continue, maintaining the downward trend.

USD/JPY price chart

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