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

FX markets look relatively quiet compared to soaring equity markets, but the Aussie has held up well, but USD/JPY is flashing a warning signal.

Pound sterling and dollar note
Source: Bloomberg

Mark Carney’s hints at fresh easing put new downward pressure on sterling, although IN_GBPUSD has yet to push below the lows of last week. This could be the fundamental catalyst that pushes the pair further downwards.

A break below $1.3110 would open the way to further downside, with the mid-1980s lows in prospect, down towards $1.15. Any bounce above $1,35 would then need to fill the gap from last week, with some resistance at $1.3675.

If the pair fails to push above the 200-day simple moving average (SMA) today ($1.1098) then, despite the bounce of the past few days, the pair may start to drop once again, down towards $1.10 and then $1.0912. A rally above the SMA would target the peak from Thursday, around $1.1156, and then on towards $1.12

​The pair has marched steadily higher along with other key risk gauges like global stocks markets, although it is still well off the pre-Brexit highs. So far gains have faltered just below $0.7480, and thus this is the area to watch today and in coming sessions.

It would likely take a move below $0.74 to reignite bearish momentum, with downside targets at $0.7350 and then $0.73.

While other markets have raced higher, the sober reaction of IN_USDJPY may well point to troubles beneath the surface. The pair needed to push on above ¥104 to maintain its upward momentum, but at present it looks to be fading.

A close below ¥102 would likely hand the initiative to the bears, with a potential move back down to the lows of last week below ¥100. 

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