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

Cable is striving to push off a potential base around last week’s lows, with its situation emulated by USD/JPY. Meanwhile eurodollar continues to push toward a key downtrend line.

Pound and dollar
Source: Bloomberg

GBP/USD eyes $1.30

Yesterday saw the pound stage a modest recovery, crucially taking it back above the lows of last week at $1.2945. So far the pair is looking to move back above $1.30, with the possibility of a short-term rally to $1.31, and then onwards to $1.32.

If the lows of the week around $1.2945 fail then the Friday-Monday low at $1.2915 could see further support. Otherwise, we look to the lows of the current range down towards $1.2865.

EUR/USD could move back to 200-day SMA

Yesterday saw the pair hit the descending trendline off the May high, which capped gains in August and earlier in September.

EUR/USD needs to break $1.1280 to be in with a chance of breaking this downtrend. Otherwise it risks a move back to the 200-day simple moving average (SMA) at $1.1156.

Overnight losses have steadied around $1.1240, so this provides a short-term base for any rally.

USD/JPY rally needs to clear last week's high

Here too a base appears to be forming, since a sudden plunge towards ¥100 brought out buyers again, as it did on 22 September.

The gains appear to be petering out below ¥100, so this process may take more time. Any rally needs to clear last week’s high at ¥101.22.

Ultimately, the pair is still stuck in the downtrend that has prevailed since the start of the year, but the lack of a new lower low below the ¥100 support level still makes it difficult to call the direction for coming weeks. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.