FX levels to watch: EUR/USD, GBP/USD and USD/JPY
The dollar has been enjoying a resurgence, with EUR/USD and GBP/USD both selling off sharply. As USD/JPY rises towards trendline resistance, markets will be watching to see if this dollar rally can continue.
Source: Bloomberg
EUR/USD falling back from triangle resistance
EUR/USD is turning downwards from trendline resistance this morning, continuing the triangle formation that dates back to the beginning of November.
The sharp decline we are currently looking at is taking us into the trendline support, which underpins this triangle formation. Keep an eye on this trendline as a potential reversal point, where a break below $1.1305 would be required to signal an impending bearish phase.
GBP/USD breaking lower from Fibonacci resistance
GBP/USD is also selling off heavily after reaching the 61.8% Fibonacci resistance level, with the price forming and completing a head and shoulders formation. This points towards a likely breakdown into new lows below the $1.2477 level.
A break back above the week’s highs of $1.2688 would point towards a potential wider 76.4% retracement. So, unless that happens, we are looking for GBP/USD to continue declining in the search of a new lower low.
USD/JPY grinding higher towards trendline resistance
USD/JPY has been pushing higher, moving into the 76.4% Fibonacci level. The pair has been providing lower highs over the past two months, pointing towards a potential bearish reversal coming into play in the near future.
Watch for a break below the most recent intraday swing low, which is currently ¥113.14. Should that occur, we would be looking for another move lower, with the ¥112.23 level coming into view. Only with a rally through the ¥114.03 level would we expect this upward move to have legs.
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