FX levels to watch – EUR/USD and GBP/USD

Both EUR/USD and GBP/USD are strengthening following periods of downside. However, with the threat of downside still looming, the longevity of such a rebound is worth questioning.

EUR/USD strengthening within triangle formation

EURUSD sold off sharply from the crucial $1.1744 level last week, continuing the triangle formation that has been in play throughout July. With the 200-day simple moving average (SMA) up ahead, a break above that level would point towards a bullish start to the week, as the pair heads back towards the upper threshold of the triangle formation.

Ultimately, a break above $1.1744, or below $1.1574, would provide a breakout signal. Until then, the triangle remains key, with the price likely to head higher from here if the 200-day SMA is broken.

GBP/USD regaining ground after deep pullback

GBPUSD has posted a deep retracement, following on from the rally into the 76.4% resistance level. This points towards a potential period of downside, with a break below $1.3071 required to provide evidence of an impending period of further downside.

This morning we are seeing the pair rally through the $1.3131 resistance level, pointing towards further short-term upside. The question over whether such short-term upside breaks through the $1.3214 resistance level or not is going to be key to determining whether this is a short-term rebound or the beginning of a more bullish phase. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.