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

Janet Yellen has put the fight back into the dollar, with clear ramifications for the likes of the euro and the yen. 

Source: Bloomberg

GBP/USD dominated by the dollar

Yellen’s testimony yesterday put some of the fight back into the dollar bulls, but the damage in sterling has already been done by inflation figures that failed to live up to expectations. We have seen $1.2440 act as good support so far this week, but a drop below here would pave the way to the February low at $1.2350.

Dollar’s strength predominates, and it will take a push above $1.26 to suggest the rally in cable is back on.

EUR/USD hits fresh selling    

The bounce yesterday provided an ideal point for fresh selling, with a move back below $1.0620 indicating that the advantage continues to lie with euro bears.

A close below $1.0560 would indicate a drop to the second weekly support pivot at $1.0497, and with no sign of a turn in place rallies will continue to be sold. 

USD/JPY on the upside 

Yellen’s testimony emboldened dollar buyers, pushing the price back above Y114 and clearing the high from 13 February.

The next target on the upside is the 50-day simple moving average at Y115.15, and above this Y116.44. Signs of further weakness should be regarded as buying opportunities unless we see a drop back below Y113.

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