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

EUR/USD is trading at a key resistance level, while USD/JPY approaches a support level which could give way to 14-month lows. Meanwhile, EUR/GBP is approaching a crucial breakout level.

Key resistance rallied for EUR/USD

EUR/USD has managed to bounce up to the $1.2334 resistance level overnight, with the price starting to show signs of weakness.

This is the clear near-term resistance level to watch out for, with the overbought stochastic starting to roll over. A break through $1.2334 would point towards a wider rally, with the possibility of a deeper retracement of the $1.2523-$1.2205 sell-off on the cards.

EUR/GBP close to crucial breakout level

The pair has managed to rally further overnight, with EUR/GBP coming close to the £0.8910 high, which would negate the descending channel in place over the past four months.

With trendline support currently being challenged, a break lower from here could begin a bearish phase for the pair. The upcoming UK consumer price index (CPI) reading will likely have a significant impact on whether we break above £0.8910 (bullish), or below trendline support (bearish). For greater confidence of a bearish shift, look out for an hourly close below £0.8843.

Breakdown for USD/JPY brings us towards key support

USD/JPY has managed to fall out of its recent descending triangle formation, with the price hitting a new five-month low.

While this does bring a bearish continuation signal, it is worthwhile noting that the pair is approaching an even more important support level, in the form of ¥107.31. A move below that level would bring about a 14-month low for USD/JPY. As such, watch for a response at ¥107.31 to guide price action over the medium term. 

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