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

The dollar is expected to regain ground after losses against the yen and euro overnight. However, the pound is a different story, with major gains across the board in recent weeks.

Euro and dollar notes
Source: Bloomberg

EUR/USD pullback fails to convince
The pair began turning lower overnight, following on from a retracement higher. As such, this move higher looked more like a temporary bounce than a bottom. However, the shallow retracement we have seen since is not convincing as the spark for another move lower and thus we could move higher yet, with the 76.4% retracement (1.1287) of particular interest.

Ultimately, we would need to see an hourly close above 1.1309 to bring about a more bullish view. Otherwise, the downtrend has a good chance of returning. It may just not be quite yet.

GBP/USD on rampant uptrend
The pair continues to rally heavily this morning, following on from a break through 1.4459 resistance yesterday. Today we have seen the pair break through the crucial 1.4514 level (March high) to form a new two month high.

As a result, we now have few resistance levels in view apart from the February high of 1.4668. Given how devalued this pair is historically, it seems likely we will see this rally extend higher for some time yet. As such, the bullish view remains in play, where an hourly close below 1.4400 would signify a period of retracement and pause in the rally. 

USD/JPY rallying from crucial support level
The pair has sold into the crucial 110.66 support level, which not only represents the March low but also the 76.4% retracement of Friday’s rally. Given the break through 110.66 on Friday, a more bullish picture is in view and this pullback is exactly what we wanted to see before another rally. As such, a bullish view is in play unless we see a break and hourly close below 110.28. Near term resistance levels of note are 110.88, 111.06, 111.35 and 111.84.

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