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

The Fed has pulled the rug out from underneath the dollar, sending many pairs flying higher, while USD/JPY sinks back towards the February lows.

Pound coin and dollar notes
Source: Bloomberg

GBP/USD targets last Friday’s high
Yesterday’s recovery in GBP/USD leaves the pair at an interesting juncture. The swift retracement after morning losses would seem to suggest that buyers are back in charge, on the back of USD weakness, but while momentum might push us back to $1.44, it will take a real break above here to confirm that the uptrend is back in play.

Possible resistance today at $1.4330 may stem progress, but a break through here still targets the high from last Friday near $1.4450. A drop through support at $1.4230 would head towards $1.4150 and then down to yesterday’s low at $1.4050. 

EUR/USD on course for February highs
If Mario Draghi wanted a weaker euro, he certainly hasn’t got it. The pair is now firmly on course to hit the February highs around $1.1350, as dips continue to be bought.

With momentum indicators still firmly bullish, it makes little sense to stand in the way of the trend, so moves back towards the 50-hour or 100-hour simple moving averages (SMA) should be the events to watch for to add to positions. Chances are that the bears will need sustained price action below $1.11 to indicate the rally has ended. 

AUD/USD targets June high
There seems to be no stopping AUD at present, and with USD weakness all the rage it looks like we are on course to turn the March breakout above $0.74 into something impressive indeed.

Assuming that the pair can hold above $0.76 this week and in the next, then it looks like the next target will be the June high around $0.7850. Retracements back towards the 200-hour SMA (currently $0.7480) should see buyers return. 

USD/JPY looks for support
Yellen’s comments last night certainly floored the dollar, sending it plummeting through March support at ¥112.20, and on towards the key ¥111 level. If this is broken then we look to the October 2014 high of ¥110 as next possible support for the pair.

A retracement back towards ¥122.20 might provide an opportunity to sell again, with a more attractive risk/reward profile. 

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