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

The dollar is on the backfoot this week, with late gains last week turning into losses against EUR/USD and GBP/USD. Will USD/JPY also turn lower to reverse from a crucial resistance level?

Euro
Source: Bloomberg

EUR/USD heading for a strong start

EUR/USD has been regaining ground this morning, following on from the European Central Bank (ECB) fueled sell-off seen on Thursday and Friday.

The key hurdle to overcome here is $1.1644, where an hourly close above that level would point towards a wider resurgence. In that event, we would be looking for a Fibonacci retracement, with the $1.1705-1.1774 region coming into play (50-76.4%).

EUR/USD price chart

GBP/USD pushing higher ahead of BoE

GBP/USD similarly lost a significant amount of ground last week, with the pair breaking below the $1.3087 mark. However, we are now seeing the price regaining ground, and with the Bank of England (BoE) expected to raise rates later this week, there is a good chance this move could continue for some time yet.

As such, watch out for further upside, set within a recent broadening formation (higher higher/lower low). We await a break from that uncertain pattern. However, for now, the short-term looks bullish for the pair.

GBP/USD price chart

USD/JPY consolidates below key resistance

USD/JPY has been consolidating below the crucial ¥114.50 resistance level. A break through that level would form a new seven-month high for the pair. However, given the bearish moves we are seeing for the dollar, there is a chance we could see the pair break to the downside. If that happened, the fact that it was happening from such an important resistance level would likely cause traders to think that we could have some further downside momentum. The bearish divergence between the price and the stochastic oscillator provides another clue that we could be set for a bearish breakdown.

That being said, with the Bank of Japan (BoJ) providing their latest rate decision overnight, it is worthwhile noting the significant event risk ahead. An hourly close below ¥113.34 would provide a more bearish short-term view, while an hourly close above ¥114.50 would provide a bullish continuation signal. 

USD/JPY price chart

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