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

EUR/USD and GBP/USD begin to turn lower, while USD/JPY seems to be ignoring this dollar strength as it falls further.

USD/JPY notes
Source: Bloomberg

EUR/USD breaking lower from triangle formation

EUR/USD is currently breaking through trendline support, within a triangle formation that has been in play over a week. This signals a potential breakdown in the current uptrend. However for it to come to fruition, we would need to see an hourly close below $1.1240. Should that occur, then a bearish view would come into play.

Until then, the uptrend remains in play, with an hourly close above $1.1285 providing the strongest indicator that we are set for another leg higher.

EUR/USD chart

GBP/USD shows signs of reversing lower

GBP/USD has been gaining ground for almost two weeks now, following a sharp deterioration in late May. Given that this recent rally was preceded by a break below $1.2831, it is likely that we are seeing a retracement before we sell off once more.

The shorter-term price action is now starting to show that weakness is coming to the fore, with the price failing at the $1.2921 resistance level. The next big bearish sign we are looking for would be an hourly close below $1.2872. Until then, there is a good chance that we could see another leg higher given the recent trend.

GBP/USD chart

USD/JPY falling once more after minimal retracement

USD/JPY is selling off again this morning, following a 23.6% retracement overnight. The events of this week are clearly helping the yen, with further downside expected. The short pullback overnight provides us with a relatively near stop loss, which therefore makes a strong risk to reward trade more attainable.

As such, an hourly close below ¥109.18 would provide a bearish signal, with stop above the overnight swing high of ¥109.63. Alternately, an hourly close above that level would negate this recent downtrend and would point towards a period of consolidation or retracement. 

USD/JPY chart

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