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

Dollar weakness is driving EUR/USD and GBP/USD higher ahead of tonight’s FOMC statement. Could we see this trend extend to USD/JPY which is awaiting a triangle breakout? 

Source: Bloomberg

EUR/USD attempting to break higher
The upward retracement seen in EUR/USD this week appears to be continuing apace, with the last candle breaking yesterday’s high and 50% retracement around $1.0877. We would need to see a closed hourly candle above this area to provide a bullish outlook for the morning. However, unless we see a move back above $1.0922, a bearish medium-term outlook remains, with the current upside seeming to be more of a retracement than a reversal.

It is likely this pair will be significantly impacted by the perceived sentiment at this afternoons FOMC meeting, so watch out for positions coming into that announcement. Should we see an hourly close above $1.0877, resistance levels of $1.0900 and $1.0922 would be the next major levels to watch. Support levels to watch are $1.0853, $1.0825 and $1.0789.

GBP/USD in bullish wedge break
Yesterday’s early break lower from this wedge pattern proved to be a fake out, with price swiftly recovering and breaking through the crucial $1.4286 level. This has provided us with the bullish signal we were looking for.

Subsequently, this morning’s pullback looks like a retracement before another leg higher for the pair. Support levels that could provide the next bounce for the pair are $1.4310 and $1.4286. Should we see this pair turn higher once more, we would be looking at initial resistance levels of $1.4363, $1.4400, $1.4445 and $1.4476.

Awaiting USD/JPY triangle breakout
Yesterday morning saw a nice bounce for USD/JPY, following what looked like a retracement for the pair. However, the failure to retake the ¥118.86 level means we are now starting to see price narrow into a symmetrical triangle pattern, which has once more provided support this hour.

With that in mind, we are simply awaiting a break through trendline resistance and an hourly close above or below the first swing high/low on the way out. Thus a closed hourly candle above 118.62 would provide a bullish view, with ¥118.65, ¥118.86 and ¥119.50 the next major resistance points.

Alternately, a closed candle below ¥117.65 would provide a bearish view with ¥117.47, ¥116.97 and ¥116.51 the key support levels to the downside.

AUD/USD channel break brings us back to resistance
Yesterday saw AUD/USD break through channel trendline resistance and crucially through $0.6968 which was tested as subsequent support. However, this rally has now come into $0.7044 resistance, which is the test for today.

A closed hourly candle above this level would provide a continued bullish outlook, bringing $0.7069, $0.7077 and $0.7097 into play. Alternately, an hourly close below $0.7006 would bring a more bearish short-term view, with $0.6968 $0.6938 and $0.6918 the next key support levels. 

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