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

It's another move lower for GBP/USD, EUR/USD and USD/CAD expected, while USD/JPY seeks to follow yesterday’s rally, with another break higher.

Pound and dollar
Source: Bloomberg

EUR/USD sell-off slows

The sharp depreciation in EUR/USD over Friday and Monday has somewhat petered out into a low volatility environment. This morning has posted a new higher low, yet with the pair coming back into trendline resistance, there is a good chance we could see yet another move lower from here. 

With the 50-hour simple moving average also at the $1.0875 resistance level, a short-term sell-off seems likely. However, should we see a closed hourly candle above $1.0881 would provide a signal of a deeper retracement, where resistance levels of $1.0898 and $1.0914 would come into view.

Ultimately, we would need a break back up above $1.0963 to negate this recent downtrend.

GBP/USD back into overbought

GBP/USD has been relatively choppy over the past week, despite the clear downtrend in play. The four-hour chart shows the two retracements we have seen in that time and crucially, both have created consecutive lows and lower highs.

We are once again seeing the pair back into overbought territory on the stochastic oscillator and given the bearish trend, we seem likely to move lower once more in the near future. Given that we have not hit any notable resistance levels this morning, there is no signal that the move lower would come from here.

However, a closed hourly candle below $1.3904 would provide a bearish signal for another move back to $1.3878 and $1.3841 support levels. 

Alternately, a break above $1.4042 would be a warning sign that we could see a more extended move higher, towards $1.4063 and $1.4080 resistance. 

USD/JPY breaking higher

USD/JPY saw a strong rally yesterday, following on from a flag continuation pattern. We are seeing this move extended today, with a period of overnight consolidation giving way to what looks like another rally.

With price currently breaking through to new highs for the day, it seems like the consolidation is over and thus a renewed bullish view is in play.

The main resistance level in view is ¥114.87, while an hourly close back below ¥113.70 would negate this current bullish view with subsequent support levels at ¥113.37, ¥113.20 and ¥113.05.

USD/CAD bearish amid early bounce

USD/CAD sold off heavily yesterday, finally breaking out of almost a week of consolidation. This continues the downtrend for the pair, driven by rising crude prices.

Early strength this morning is seen as a retracement of yesterday’s move and thus it seems highly likely to be sold into once more. With that in mind, a bearish view remains unless we see a close back above C$1.3587. Near-term resistance levels are C$1.3457 and C$1.3481, with support at C$1.3386 and C$1.3353. 

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