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

The rally in EUR/USD and GBP/USD goes on, although it may be little more than a brief respite given the current strength of the USD trend.

EUR/USD revival continues

EUR/USD has pushed above the downtrend line from the May highs, continuing an impressive rebound from the $1.13 nadir of August.

The July highs around $1.1750 are likely to provide a zone of resistance, and then $1.1852 comes into play. For the time being the outlook is near-term bullish, but a reversal back below $1.16 could well signal the reassertion of the bearish momentum that has prevailed over the past four months.

GBP/USD bounce gathers momentum

The recovery for GBP/USD has been more modest, but if the pair can post a daily close above $1.2940, the highs of last week, then we can expect a bigger move higher towards the $1.3040 area and also the downtrend line from the pair’s own May highs.

A reversal and close below $1.28 would suggest the bearish trend from April has taken charge once again.

USD/JPY steadies above ¥110.00

Having rallied above the downtrend line from the July peak, USD/JPY looks set to push higher unless we see a move back below ¥110.90.

Above ¥111.50, ¥112.17 and then ¥113.15 come into view as upside targets. A close below last week’s lows at ¥109.80 would ignite a bigger retracement.

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