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

Dollar weakness is already the theme of the week, which will have interesting ramifications across the FX space.

Euro and dollar notes
Source: Bloomberg

GBP/USD recovers from Friday’s weakness

The pair has recovered in spectacular style from the weakness of Friday, and is now testing the $1.2477 area. A move above here would head towards $1.2550, with bigger long-term targets at $1.2688 and higher.

Dips may provide fresh buying opportunities, so weakness around $1.24 or even $1.2350 could see fresh bullish momentum emerge.

EUR/USD rally continues

There seems no end to the euro rally, with dollar weakness playing a major role. The next areas to watch are $1.0825 and then $1.0950, with dips likely to see fresh buying. So long as the price holds above $1.06 more gains are likely.

The pair remains stuck in a broader downtrend off the summer 2016 highs, so for now this is a countertrend rally, but more strength is expected for the time being.

USD/JPY drops after Friday’s strong performance

A strong finish on Friday has given way to a gap down, with the pair back below ¥114. Further losses will challenge the low of last week at ¥112.50, and then on to ¥111.20 and ¥109.86.

USD/JPY bulls would need to stage a close above ¥114 to indicate some bullish momentum, which could result in a test of ¥116 and ¥117.30.

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