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

Dollar strength has returned, reviving USD/JPY and also keeping a lid on gains in EUR/USD. 

Pound and dollar currency
Source: Bloomberg

GBP/USD bulls eye $1.2322

An attempt yesterday to push on above $1.23 has run out of steam, and now we look to see if the pair can move back below $1.2250. If today’s retail sales data does not inspire fresh buying of sterling then the next move looks to be lower.

Bulls need to push the price back above yesterday’s highs around $1.2322, and then on to $1.2477. Below $1.2250 the pair will head towards $1.2134.

EUR/USD could test March lows

The rate of decline here has slowed, but the downtrend is intact. However, it has now run into support at $1.0952, last really tested towards the end of July.

For the time being, rallies may continue to be sold, with a close below $1.0952 leading to a test of the March lows at $1.0825, and then down to $1.0710.

A rally needs to move above $1.1050 to maintain momentum for EUR/USD.

USD/JPY looks for a close above ¥104.32

After three days of weakness, the dollar bulls have returned to push the pair off the lows seen yesterday. However, buyers will need to get the price back to ¥104 to avoid this rally simply being a selling opportunity.

If it does turn lower, then we would look to the lows yesterday around ¥103.16 as a first target and potential support, with a move below here heading towards ¥102.80.

A break back to ¥104 still needs to clear ¥104.32, and close above this level, to signify a new upward move is in progress. 

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