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

After yesterday’s dollar rally, the FX markets have settled somewhat, with EUR/USD and GBP/USD reversing some of those moves. Will we see that momentum pick up again ahead of the US election?

Euro and US dollar notes
Source: Bloomberg

EUR/USD looks to retrace previous downturn

EUR/USD has managed to claw back some ground overnight, as yesterday’s dollar conviction appears to have hit the buffers, likely driven by a degree of profit-taking and positioning ahead of tonight’s election.

Price has been pushing through the $1.1059 marker, where an hourly close above that level would provide clues that we are likely to see a deeper retracement of yesterday’s sell-off.

With that in mind, there is a good chance of a short-term rally which would then play into what looks like a bearish reversal into the wider long-term downtrend. 

GBP/USD attempts to regain lost ground

GBP/USD has been rising overnight, with price moving back into the key $1.2436 mark. This looks like a sign that we could be seeing a stronger rebound in play, with an hourly close above $1.2436 pointing towards a move towards the $1.2500 region.

That being said, there is every chance today could see lower volatility as everyone awaits the beginning of the election results.

USD/JPY holding on to major support level

USD/JPY continues to consolidate above the crucial ¥104.32 level today, with little directional volatility in either direction. The ¥104.32 mark is important owing to the fact it was the September high, which once broken last month, marked the likely end of a ten-month downtrend.

As such, should we see price remain above this level, it looks like a good base for the pair to move higher once more. An hourly close below ¥104.32 would point towards a move lower, with ¥104.00 support the first port of call.

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