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

US dollar weakness is once again in play, with EUR/USD and GBP/USD seeking to extend their gains. USD/JPY is also turning lower following a brief rally this week.

Pound and dollar
Source: Bloomberg

EUR/USD flag points to further gains

EUR/USD is back on a positive path, rallying heavily this week, with price breaking through the crucial $1.1335 resistance level yesterday. We are seeing a retracement coming into play currently, yet given the shallow slant of this move, it looks more like a continuation flag than anything indicative of something more bearish.

As such, further gains are expected, with $1.1465 the key resistance level to break for yet another higher high. This bullish outlook remains in play unless we see a move below $1.1335 for the short-term view and $1.1059 for the medium-term view.

GBP/USD runs into trendline resistance

The IN_GBPUSD rally has hit the buffers overnight, with a doji candle at trendline resistance marking the top for now. However, we have now come back to the previous April peak at $1.4348 which coincides with the 23.6% pullback.

Thus the exit from this triangle will dictate direction for the day, where a break through trendline resistance would look towards $1.4459 as the next key resistance level.

Alternately, a closed hourly candle below $1.4348 would point towards a deeper retracement, with $1.4309, $1.4275 and $1.4241 the next important support levels in view.

USD/JPY at crucial support level

IN_USDJPY has tumbled lower since hitting the 61.8% retracement at ¥109.49. We have since seen the creation of lower highs and lower lows, bringing price back to the 38.2% retracement and ¥108.73 support level.

Given that this support level has been respected a number of times, the ability or inability to break through ¥108.73 is expected to dictate the state of play today.

An hourly close below this level would look towards ¥108.44 and ¥107.83 as the next support levels of note. Alternately, we would need to see an hourly close above ¥109.12 for things to look a little more bullish, with ¥109.49 the next key resistance level. 

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