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

USD/JPY attempts to break a ten-month downtrend, while we look for a potential bullish breakout for AUD/USD.

US dollar and Japanese yen notes
Source: Bloomberg

EUR/USD gains look unlikely to last

EUR/USD has been rallying after a small double-bottom was completed yesterday. We are turning higher from here, but it looks likely any rally will be a retracement preceding another move lower.

As such, short-term gains could set up a break higher, yet watch out for the likes of $1.0952, $1.0968 and $1.0995 as potential bearish reversal areas.

USD/JPY attempting to complete bullish breakout

IN_USDJPY has managed to break up above the crucial ¥140.32 resistance level once more, following the continued respect of trendline support. Should price manage to break away from this area, we would essentially break out of a downtrend which has been in place throughout the whole of 2016 thus far.

As such, watch out for potential further upside, with ¥104.87 the next key resistance level. Should we see this uptrend continue, then it would have longer-term bullish implications for the pair.

Will AUD/USD rally from Fib support?

AUD/USD has sold off sharply, helped on its way by a weak Chinese industrial production figure overnight. Price has since dropped into the 76.4% retracement and is showing some signs of strength.

The wider picture is convoluted, with last week’s break above $0.7710 providing a bullish outlook, whereas this week’s failure to retake that level provides a more mixed picture. Given the current deep retracement, it seems like a reasonable idea to look for longs, or at least look for shorter intraday bullish reversal signs to support that theory.

The wider picture portrays a market which could be on the cusp of a wider break higher from this multi-month symmetrical triangle and as such, it seems reasonable we would stop tumbling into trendline support.

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