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

The dollar continues to gain ground, as both EUR/USD and USD/JPY seek to follow up on Friday’s dollar positive moves. However, with a Brexit increasingly unlikely, GBP/USD has been a standout performer despite dollar strength.

Euro and dollar notes
Source: Bloomberg

EUR/USD bounce unlikely to last
The pair saw a highly volatile week just gone, yet the overall resolution was one of losses for the pair, closing out at a three week low. The overall trend of higher highs and higher lows has now been negated with the failure to break through 1.1465 and subsequent break to a new low.

As such, further losses seem likely, with sellers expected to capitalize on any early weakness today. With that in mind, watch out for Fibonacci retracements at 1.1264, 1.1274 and 1.1287 as potential bearish reversal points. A closed hourly candle above 1.1309 would provide a more bullish picture.

GBP/USD reaches key resistance
The pair has seen a sharp appreciation over the past week, as the chances of a Brexit continue to narrow. The pair has run up towards 1.4459 resistance, which marks the 30 March peak. This level will be the core determinant of the day’s price action, where an hourly close above 1.4459 would point towards 1.4514 as the next resistance level in view.

Otherwise, we could see a retracement lower, with 1.4348 and 1.4317 the key support levels of note. We would need an hourly close below 1.4300 to move into a more bearish short term view. 

USD/JPY rally pauses for breath
The pair saw an incredible rally on Friday, driven in part by expectations ahead of this week’s BoJ meeting. The break through 110.66 was the most important event from a technical front and this brings us back into a more bullish stance for the medium term. This morning has seen the pair pull back to the 50% retracement and February low of 111.06.

With a small double bottom being formed, we could see another leg higher with a closed hourly candle above 111.35. However, a deeper pullback would look towards 110.88 and crucially 110.65 as the next possible areas of support.

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