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

Cable remains stuck below $1.22, while the euro is holding gains versus the dollar.

Pound coin and dollar notes
Source: Bloomberg

GBP/USD trading on event risks

It is hard to escape the impression cable is set for a steady drift lower. The data flow from the UK over the past two weeks has dried up, which leaves the pound trading on ‘event risk’ alone, and the possibility of this has gone up significantly over the weekend, thanks to the commentary surrounding Mark Carney’s position.

The failure to hold above $1.22 suggests we will see the $1.21 low of last week tested in due course, with an overbought reading on the hourly stochastics providing a possible entry point. Any rally needs to clear $1.2260, which would clear the way to the 19 October peak at $1.23. 

EUR/USD seeks to continue surge

Friday’s surge carried the price back above resistance at $1.0950 with the next target being at $1.1045. A bigger upward move may carry the pair towards the 50-day simple moving average (SMA) at $1.1134, and then through here we would look to the downtrend line at $1.12.

Shorts need to get the price back below $1.0950 to then head towards the October low at $1.0850. 

USD/JPY looks to recover losses

The push above ¥104.30 continues, with dip buyers entering the fray to recover some of Friday’s lost ground. The next step will be to push on above ¥105.50, the high from last week.

Above here the next target will be the 200-day SMA at ¥107.18, and then on towards the ¥107.50 area that marks the July high. Longer-term, it continues to look like the pair will push higher into December. Only a move back below ¥102 would begin to imperil this view. 

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