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

EUR/USD rally has the potential to turn lower, while USD/JPY attempts to regain ground after overnight losses. Meanwhile, a strong rally for AUD/USD could start to slow as it approaches key resistance.

Euro notes
Source: Bloomberg

EUR/USD consolidates after rally

EUR/USD has been consolidating this week, following a sharp rally towards the 76.4% retracement level last week. The ability to remain below $1.1040 provides a continued bearish outlook, where an hourly close above that level points towards a wider retracement of $1.1100 and even $1.1123 resistance.

For now, a bearish view remains in play, with current levels offering value to the downside given the depth of the recent retracement. 

USD/JPY rallying from trendline support

IN_USDJPY is moving higher, despite a period of weakness overnight which brought price back into trendline support. That support has held once more and is helping push the pair higher, towards the crucial ¥105.23 mark.

Should we see an hourly close above ¥105.23, then this would provide evidence that we are likely to push onwards from here. Given the bullish breakout seen on the daily chart, there is a strong possibility we could see this pair run higher.

However, the key will be whether ¥105.23 can be surpassed.

AUD/USD rallies towards trendline resistance

AUD/USD has moved sharply higher overnight, following on from a clear bottoming out which originated at the 76.4% retracement. We are seeing price approach a trendline around $0.7680.

The wider picture points towards a possible bullish breakout. However, given the extended nature of recent gains, coupled with the existence of trendline resistance up ahead, it makes sense to be cautious of a potential retracement.

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