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

Cable continues to retreat, while USD/JPY pauses for breath after a surge yesterday.

Euro notes
Source: Bloomberg

GBP/USD eyes $1.26

The drop back yesterday may mark the beginning of a steady pullback from the 50-day simple moving average (SMA). Ideally we would need to see the price move below the $1.2450 area to create a new low, with a test of support possible at $1.2350.

A recovery would need to get back above $1.26, which might clear the way to a test of $1.2680.

EUR/USD could drop to lows of 2015

After yesterday’s savage sell-off, the pair is bouncing having hit $1.0714. However, buyers will need to get the price back above $1.0850 - the lows of late October - to really indicate that bullish momentum is back.

Otherwise, it may be that this is another chance to sell into strength, with an initial target of $1.07, and then down to $1.0525 and the lows of 2015.

USD/JPY could target ¥112

Yesterday’s big move higher took the pair above the crucial ¥107.50 area. With the price still overbought some bullish momentum may fade, but it would need a close back below ¥107.50 to indicate a pullback is in the offing.

If buyers can keep the price moving higher then the next area to watch is ¥112. 

USD/CAD eyes support around C$1.3264

Having dropped back today, the pair is giving latecomers a chance to hop on board the rising trend that has prevailed since September.

Further declines might see the price move back towards support around C$1.3264. 

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