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

There are signs of a possible reversal in fortunes for EUR/USD and USD/JPY, while USD/CAD continues to move lower. 

Pound and dollar
Source: Bloomberg

GBP/USD could see $1.21

The data-heavy week for the UK has not been able to prevent an ongoing drift lower for GBP/USD. Yesterday’s bounce petered out just below $1.25, so the sellers now need to get the price below $1.2350 to create a new low.

Longer term, we could see $1.21 if sterling weakness gathers strength. A rally above $1.25 would head back to the recent peak around $1.2650.

EUR/USD could see another drop

The rate of decline has slowed here, with the price holding around the $1.07 level, after a remarkable decline over the past two weeks.

We could now see a retracement, with a move above $1.08 signalling perhaps the beginning of the rally. At present the price is relatively overbought according to momentum indicators on the hourly chart, so there is probably still room for one more drop.

However, so long as $1.0650 holds a floor may be in for the pair.

USD/JPY eyes ¥110

The price has run into resistance around ¥109, so we need to see a close above here and then ideally above ¥110 to maintain the forward momentum for USD/JPY.

With the price overbought on the daily chart there is increasing risk of a reversal, although the price will need to move below ¥108 to confirm this.

USD/CAD eyes 50-day SMA

The price continues its retreat from highs near C$1.36 for USD/CAD

A break below C$1.34 would head towards C$1.3260, the 50-day simple moving average (SMA). Below here, a move back to C$1.31 is possible. 

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