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

The US dollar is coming under pressure as GBP/USD and EUR/USD show the potential for a bullish bounce. Meanwhile, the weakness in USD/JPY is firmly established and looking to push further to the downside.

Pound and dollar
Source: Bloomberg

Is EUR/USD turning a corner?

EUR/USD broke higher in a convincing manner yesterday, with the pair subsequently selling off from the crucial swing high of $1.1220. It is important to note that we have now set a small higher low and a marginal higher high. This points towards the potential for a shift in sentiment to the upside.

It is worth noting that the medium-term picture for the pair has clearly shifted towards a bearish view and thus any period of upside in the coming days or weeks would be seen as a retracement of the May sell-off. For the near-term, the ability to break back above $1.1220 would add significant weight to the notion that we could be seeing a bottom in play, with $1.1345 the next major resistance level.

However, with the price currently consolidating, there is clear hesitancy ahead of the non-farm payrolls figures. Areas of particular interest to the downside are the 76.4% retracement ($1.1139) and the swing low of $1.1114, which if taken out would negate the view that we could be seeing a bottom.

GBP/USD sell-off passes key Fibonacci level

GBP/USD has seen a pretty shocking week, as recent polls have portrayed a very different picture of the EU referendum than that seen last week. It is worth noting that on the short-term, things do look bleak, with the pair having broken through the $1.4587 and $1.4442 support levels. However, until we see a closed candle below $1.4333, a bullish resurgence is expected to come into play.

For this to look plausible, we would need to see an hourly close above $1.4473, which would negate the creation of lower highs and lows while also forming a double-bottom pattern.

USD/JPY recovery unlikely to last

USD/JPY saw yet another sharp move lower overnight, with the pair fleetingly moving to a new three-week low. We are now seeing the pair move higher, in what looks like a retracement of this overnight sell-off.

With that in mind, a bearish view is held unless we see an hourly close above ¥109.13. Retracements to 61.8% (¥108.89) and 76.4% (¥108.99) are of particular interest to push the pair lower once more. 

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CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.