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

Recent dollar strength across EUR/USD and GBP/USD has brought about the chance of further downside for both pairs. Meanwhile, USD/JPY looks set to turn lower once more today.

EUR/USD pullback within reach of key support level

The EUR/USD pullback has dropped beyond the 76.4% retracement, bringing about a heightened risk of a bearish breakdown.

We would need an hourly close below $1.2239 to signal a more bearish picture for the pair and, until then, there is still a good (but lessened) chance the pair will turn higher from here. An hourly close above $1.2345 would provide a more reliable signal that we are set to shift into a more bullish phase.

GBP/USD rise could be short-lived

GBP/USD is gradually trying to regain ground after the selling seen earlier in the week. The break below $1.4070 paves the way for further downside, and the fact that we have seen such minimal upside means we are likely to see another leg lower soon enough.

A bearish signal would come with an hourly close below $1.4005. Conversely, we would need an hourly close above $1.4244 to bring a more bullish outlook.

USD/JPY turning lower from resistance zone

USD/JPY is selling off sharply this morning, following a rally into a zone of descending trendlines.

With the pair having provided a handful of lower highs over the past two months, there is a good chance we will see another leg lower from here. With that in mind, a bearish outlook is in play unless we see the price break above ¥107.01.

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