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

Some indecision creeps in from recent trends, with EUR/USD, GBP/USD and USD/JPY all rallying recently. However, it looks like a matter of time before the trend comes back into play.

Joshua Mahony
Market Analyst, London

2016-07-22T08:56:27+0100

Source: Bloomberg

EUR/USD

EUR/USD saw a temporary rally into the 76.4% retracement, selling off down to the week’s low $1.0981 almost instantaneously. An overnight rally looks likely to lead us into another move lower, in a continuation of the trend over the past week.

That being said, there is a possibility for a retracement of the recent selloff from $1.1165 and as such, a break above yesterday’s high of $1.1060 would look towards $1.1121 to then sell off once more.

Nevertheless, unless that happens we expect further downside to come, with support at $1.0981 and $1.0912.

EUR/USD price chart

GBP/USD

IN_GBPUSD has been gaining over the past two trading days, with yesterday’s deep retracement seeing another rally overnight. However, crucially we would need to see price break through yesterday’s high of $1.3275 to continue the trend. A failure to do so, followed by a break below $1.3155 would point towards a deterioration towards $1.3121 and $1.3064.

Given that we have not broken through $1.3315, there is a good chance this recent rally is simply a retracement of the sell-off earlier in the week, with price having now reached the 76.4%. With that in mind, it seems likely this rally will come to an end and turn lower once more soon.

A closed hourly candle above $1.3315 would negate this bearish view.

GBP/USD price chart

USD/JPY

IN_USDJPY sold off heavily yesterday’s as comments from Kuroda led to a less dovish outlook for next week’s meeting. Price action is currently trading within a symmetrical triangle pattern, from which we will await the breakout from to provide a directional bias.

With that in mind, an hourly close below ¥105.55 would provide a bearish short-term view, with ¥105.26 and ¥104.63 the next key support levels. Alternately, an hourly close above ¥106.26 would point towards a move higher, with ¥106.43 and ¥107.00 the next resistance levels to watch.