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

Cable is striving to push off a potential base around last week’s lows, with its situation emulated by USD/JPY. Meanwhile eurodollar continues to push toward a key downtrend line.

Pound and dollar
Source: Bloomberg

GBP/USD eyes $1.30

Yesterday saw the pound stage a modest recovery, crucially taking it back above the lows of last week at $1.2945. So far the pair is looking to move back above $1.30, with the possibility of a short-term rally to $1.31, and then onwards to $1.32.

If the lows of the week around $1.2945 fail then the Friday-Monday low at $1.2915 could see further support. Otherwise, we look to the lows of the current range down towards $1.2865.

EUR/USD could move back to 200-day SMA

Yesterday saw the pair hit the descending trendline off the May high, which capped gains in August and earlier in September.

EUR/USD needs to break $1.1280 to be in with a chance of breaking this downtrend. Otherwise it risks a move back to the 200-day simple moving average (SMA) at $1.1156.

Overnight losses have steadied around $1.1240, so this provides a short-term base for any rally.

USD/JPY rally needs to clear last week's high

Here too a base appears to be forming, since a sudden plunge towards ¥100 brought out buyers again, as it did on 22 September.

The gains appear to be petering out below ¥100, so this process may take more time. Any rally needs to clear last week’s high at ¥101.22.

Ultimately, the pair is still stuck in the downtrend that has prevailed since the start of the year, but the lack of a new lower low below the ¥100 support level still makes it difficult to call the direction for coming weeks. 

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