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

US dollar strength yesterday appears to be receding, leading to the possibility of further downside for USD/JPY. 

EUR/USD notes
Source: Bloomberg

EUR/USD – rally extension towards $1.12?

EUR/USD retracement ran for most of Thursday’s session, but once again buyers came in to defend the $1.1080 level, as they did a day earlier.

The bounce off this level continues to suggest an extension of the rally, towards $1.12 and higher, but it needs to clear the $1.1180 high from Tuesday/Wednesday, to avoid creating a lower high. A drop through $1.1080 would be a bearish development, but the loss of $1.10 would be the real bearish catalyst.

GBP/USD support still lies at $1.2850

It was a volatile day for GBP/USD yesterday, as it spiked up to $1.3040 before slumping towards $1.29. Nonetheless, with a recovery back above $1.2980 it looks like the buyers are in charge again.

They still need a push above $1.30 to clear the way to fresh monthly highs in the direction of $1.34. As earlier in the week, support still lies at $1.2850. 

USD/JPY tests resistance at ¥111.68

USD/JPY dropped down towards support at ¥110, before bouncing back to test resistance (previous key support) at ¥111.68.

If this is not broken, then it looks like the sellers are in control, and we would look for another push to ¥110. But if this is broken, then on towards ¥108. 

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