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

Dollar weakness is once more on the agenda, with EUR/USD rallying and USD/JPY falling back. However, could the relative indecision in GBP/USD highlight an impending turning point?

Euro and dollar notes
Source: Bloomberg

EUR/USD breaks higher once more
EUR/USD has broken higher once more this morning, with a clear rounded bottoming out seen yesterday. This looks like a deep retracement of the EU referendum sell-off and as such, this does not alter the bearish medium-term outlook.

However, further gains are expected for now, with an hourly close above $1.1197 pointing towards further upside before we consolidate once more. Looking at the last consolidation and breakout points towards the likely price action today.

It would be of particular interest to rally into the 76.4% retracement ($1.1306) over the coming days. However, for now we are looking for further short-term gains with initial resistance at $1.1236. We would need to post an hourly close below $1.1154 to negate this uptrend. 

Will GBP/USD weaken ahead of BoE?
IN_GBPUSD has certainly seen nothing like the gains evident in EUR/USD this morning, with initial upside turning lower this hour. We have been seeing a relatively choppy period of strength, with little confidence behind it given the expectation of easing on Thursday.

As such, it makes more sense to await a bearish signal rather than play any potential short-term strength. Thus, an hourly close below $1.3165 would signal a likely end to this recent rally, with the potential for further marginal gains until then. 

USD/JPY consolidation gives way
IN_USDJPY has sold off once more this morning, with the break below ¥101.97 leading to the creation of yet another lower low. As such, further losses are expected, with a bearish view in place unless we see an hourly close above ¥102.83. Any bounce would look towards Friday’s low of ¥101.97 as a potential resistance level to push price lower once more. 

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