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

The euro continues to weaken against the pound, while USD/JPY looks like it may be on the verge of breaking out. 

Euro coin and sterling note
Source: Bloomberg

EUR/GBP breaks lower

A steady weakening in the euro has combined with some strength in the pound to push this pair back below £0.90.

So far, the price is showing little inclination to move below £0.8880, with £0.8740 and then the 50-day simple moving average at £0.8673 the next areas to watch for on the downside. We would need to see a move back above £0.8940 to indicate the pair has turned around.

AUD/USD downside target in sight

The pair has spent the past three sessions hovering above $0.7590, which is the clear downside target in any initial push lower. So far the overnight bounce has carried the price back to $0.7640, yesterday’s high.

A failure to push on above here could bring out more buyers, with a drop through $0.7590 then running into the rising trendline at $0.7560. Then we will see if the price can bounce off this line, as it has done all year. 

USD/JPY recovers

The price recovered yesterday and is now testing the ¥104.40 area. If it can manage a solid close above this level then the way may be clear to head towards the August peak at ¥107.50.

Continued bullish momentum should mean dips will be bought, with the bears needed to get the price back below ¥104 to indicate this breakout has failed. 

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