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

FX pairs show a move towards riskier assets, with GBP gaining heavily overnight. With EUR/USD and GBP/USD both reaching key resistance levels, will this risk rally be halted or can they break through for further gains?

Joshua Mahony
Market Analyst, London

2016-06-23T09:52:48+0100

Source: Bloomberg

Be aware that as the results come in, these FX pairs are open to significant, unpredictable, volatility.

EUR/USD rising wedge in play

EUR/USD has been gradually gaining overnight, with a rising wedge pattern now in play. This is typically bearish and as such, it would not be surprising to see some sort of leg lower, even if it is just a short-term retracement.

Interestingly, this pattern has formed with a top at the crucial $1.1349 resistance level, which needs to be broken to return back into a short-term uptrend. With that in mind, a short-term leg lower is expected for this morning, with an hourly close needed above $1.1349 to continue this uptrend.

EUR/USD price chart

GBP/USD pulls back from major resistance level

IN_GBPUSD has been retracing lower from the major $1.4831 resistance level this morning. That level represents both the 50-week simple moving average and 2013 lows. As such, we would need an hourly close above this level to continue the uptrend, with $1.5000 the next key resistance level after that.

Until that happens, we could see caution and hesitancy creep in ahead of the referendum results. An hourly close below $1.4641 would be required to negate this uptrend.

GBP/USD price chart

USD/JPY range remains

IN_USDJPY saw a move back up towards the top of its range, with price reaching the ¥105.00 level before turning lower. Given the more risk-on sentiment we have been seeing over the past 24 hours, a smaller range has formed between ¥104.34 and ¥105.00.

Given the failure to hold below this level, we would need to see an hourly close below ¥104.34 to then look towards the wider range bottom at ¥103.58. Until that happens it seems likely we will see this smaller range remain in play for a move back towards ¥105.00.