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

GBP/USD and EUR/GBP strength comes under pressure with Fibonacci resistance in play. Meanwhile, USD/JPY could sell off once more, as North Korea looks likely to test again.

Pound notes
Source: Bloomberg

GBP/USD rallies into key Fibonacci resistance

GBP/USD has managed to rally back into the 76.4% retracement overnight, following yesterday’s European Central Bank (ECB) meeting. Given the bearish wedge breakdown seen in August, alongside the move back below the swing low of $1.2811, it looks like a strong possibility that we see the sellers come back into play from this region.

A break back up through $1.3268 would negate this bearish view, yet it makes sense to either look for shorts from $1.3152, or else follow intraday charts for reversal signals. 

EUR/GBP shows signs of bearish reversal

EUR/GBP rallied sharply after yesterday’s ECB meeting but with the price starting to turn lower from a key resistance level, it looks like we could see this market turn lower once more. The upside seen earlier in the week brought about a similar 76.4% retracement, and subsequent sell-off, which appears to be what could be on the cards here.

The existence of the 50-period simple moving average SMA (4-hr) adds greater credence to this move lower, where a bearish outlook remains in place unless we see a move back up through £0.9227.

USD/JPY sells into new nine-month low

USD/JPY has tumbled into a nine-month low, with markets continuing to favour the yen for haven purposes. This could persist over the weekend, with North Korea likely to test another weapon for the country’s anniversary celebrations.

The chart below highlights that we are some way away from the most recent swing low of ¥109.39, which is the level that needs to be broken to negate this bearish view. Until then, further downside seems likely.

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.

Find articles by analysts