Strength in cable continues to dominate, while the Aussie struggles to clamber off recent lows. 

Source: Bloomberg

GBP/USD undergoing a bullish crossover
The two day rally in GBP/USD has arrived at the 200-day simple moving average ($1.5350) and has paused at this point. However, daily stochastics have posted a bullish crossover, while the relative strength index is rallying sharply, so buy on the dips appears to be the approach here.

Having moved so quickly in a short space of time it may be wise to wait until the pair goes through a pullback, perhaps towards the $1.5320 area, rather than chasing a price which remains overbought on the hourly-chart.

EUR/USD remains turbulent
It has been a difficult journey in EUR/USD, but the pair finally made it back to $1.12 this morning. However, it is still uncertain as to whether this is a short-covering move before the next leg down, towards $1.10.

Certainly if the pair fails to move back above $1.12 and close above here then the sellers may regain control. Buyers must get the price back to $1.1250 to avoid seeing a retest of $1.1136 and then the $1.11 level.

AUD/USD experiencing oversold bounce
The Aussie continues to rally off last week’s lows, but for the time being it still looks like an oversold bounce rather than a turnaround. So far today the $0.6989 line remains unbroken, and it will take a move through the 2/3 September high of $0.7050 to confirm that this is more than just a short jump before another move lower. Downside targets lie towards $0.6917 and then $0.6898. 

USD/JPY bounces higher
¥118.80 continues to provide strong support, allowing the pair to bounce higher this morning and move back to ¥120. The next line of resistance is ¥120.41, and then on to the 200-day SMA at ¥120.83. Beyond this the target is ¥122, while a failure to hold today’s gains would test ¥118.80 once more and then move on to ¥118 itself. 

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