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

Both EUR/USD and USD/JPY look likely to turn lower from 76.4% resistance, while GBP/USD finds support on the same pullback.

GBP/USD forex pair
Source: Bloomberg

EUR/USD turns at crucial Fib level
EUR/USD has begun to turn lower, having rallied into the 76.4% retracement yesterday. We have remained within a clearly defined downtrend throughout May so far and thus we would need to see an hourly close above $1.1243 to negate this trend.

As such, a bearish view is preferred for a move back down to $1.129 support. The stochastic oscillator and MACD histogram confirm this bearish bias, with both turning lower to match price action.

GBP/USD fails to break through key support level
GBP/USD has tried to break below a key support level this morning, in a move which would set us up for a possible period of downside for the pair. The $1.4642 level is likely to be key for today’s price action, where an hourly close below this level would likely lead to a depreciation in the pair, with $1.4601 the next support level.

Alternately, should we see this support level hold up, there is a clear uptrend in place over the past week and many will be looking to get long once more. Interestingly, the pullback seen over the past 24 hours look a lot like a retracement of Wednesday’s rally.

Thus the fact we are now seeing the pair start to rally having come within two points of the 76.4% retracement is very telling. As such, a bullish view remains unless we see an hourly close below $1.4601.

USD/JPY within triangle at Fib resistance
USD/JPY has hit trendline support once more this morning, as the pair trades within a triangle formation. This comes with a peak at the 76.4% Fibonacci pullback and as such, the bias for the eventual breakout is bearish given the multi-month downtrend in play.

Essentially it makes sense to either play the extremes of the triangle for a short-term perspective, or the eventual breakout for a bigger move. For the breakout, we will be looking for an hourly close below ¥109.11 for a bearish signal or above ¥110.66 for a bullish one.

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