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

As the dollar index turns lower, is there a chance we could be seeing a reversal of recent fortunes for the likes of EUR/USD and USD/JPY?

Source: Bloomberg

EUR/USD begins to show tentative signs of strength

EUR/USD is gaining ground this morning, following a failed attempt to break to a new low yesterday evening. This failure to create a new low could be important, with the pair closing above trendline resistance for the first time since its inception on Monday.

The key to any recovery is the ability to post a closed hourly candle above $1.1410. Should that occur, resistance levels of $1.1465, $1.1481 and $1.1529 would come into view. However, the inability to break $1.1410 would point towards another leg lower towards the $1.1357 and $1.1339 support levels.

GBP/USD turns lower once more

GBP/USD is selling off once more this morning, following a deep and persistent pullback over the past 24 hours. We are clearly set within a downtrend over the past week and thus this is an extension of this. For the day, a closed hourly candle below $1.4418 would provide a bearish signal for a move back down towards$ 1.4374.

However, with the 50-hour simple moving average previously providing resistance, it will be interesting to see if this holds up as new support. Ultimately we would need to see an hourly lose above $1.4479 to provide a more bullish view, with $1.4514 the next resistance level of note.

USD/JPY sells off towards key support

USD/JPY is giving back some of the gains we have seen take shape this week. The shallow retracement this morning highlights innate strength and points towards further losses. However, the key to whether this sell-off will last is whether the pair can break below ¥108.27.

Should that occur, support levels of ¥107.83 and ¥107.63 would come into view. However, until that happens, we remain within an uptrend and thus a bounce from the 76.4% retracement (¥108.54) seems equally likely.

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