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

Dollar weakness has prompted a rally in cable, while central bank news has put new fight into AUD/USD. 

EUR/USD forex pair
Source: Bloomberg

GBP/USD May pullback looks to be at an end
A 150-point move in cable since yesterday’s lows may well mark the end of the May pullback, with a bounce off the 50-day/100-day SMAs (simple moving average) and a push back towards the key resistance zone around $1.4550. A break above here would target the $1.4670 peak from the beginning of the month, and then on to the 200-day SMA at $1.4815.

It would likely pay not to chase such a big move, especially with CPI data on tap this morning, but overall it looks as if the stance here should shift towards short-term bullish. Only a move back below $1.44 and then through the Friday/Monday low would negate this thesis.

EUR/USD targets the upside
So far the euro has not taken advantage of USD weakness in the same way as sterling, but for the third day the $1.13 level has held, while for a second session the pair is holding above the 50-day SMA ($1.1309).

The first target on the upside would be $1.1387, and then on to the $1.15 area and the peak above $1.16 we saw towards the beginning of the month. Any close below $1.13 would return us to a bearish view, with the next area to watch being $1.1223. 

AUD/USD bulls have an opportunity
The Reserve Bank of Australia’s unwillingness to cut rates has given the bulls the chance they were looking for, with the bounce off the 200-day SMA ($0.7260) providing a near-perfect alignment of technical and fundamental factors.

The general recovery in risk appetite is helping too, and now we look for a break above $0.74 to then suggest a sustained move towards $0.75, which was key support in March/April, is underway. Essentially, it will take a move below the 200-day to cancel out this bullish hypothesis.

USD/JPY continues to rally
A 300-point rally here is now heading towards the 50-day SMA (¥110.28); previous rallies to this indicator have run out of steam so far this year, so bulls should be careful, but dip buying may still prove successful.

A break above the 50-day would head towards the late April high at ¥112, while for the moment it looks as if it will take a move back below Y108 to negate the current outlook. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.