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

The dollar attempts to claw back ground against the euro and sterling, while USD/JPY continues to tumble, in accordance with the long-term downtrend.

Euro and dollar notes
Source: Bloomberg

EUR/USD pulls back after yesterday’s rally
Yesterday saw EUR/USD finally break from its consolidation, with the pair rallying through the $1.1393 resistance and to a new month-high. We have since seen the pair retrace lower this morning, with a move into Fibonacci support likely to spark another leg higher.

As such, watch out for a potential bullish reversal from the Fibonacci retracements, with a bullish view remaining in play unless we see an hourly close below $1.1338. 

GBP/USD tumbles through support
The pair has had an interesting time of late, with the past two months seeing the pair swinging within a wide range of $1.4333-$1.4769. We are currently heading towards the lower end of this range, yet given the ability to break through Friday’s high, it remains likely we are going to see a resurgence.

As such, this move seems like a retracement of the rally seen earlier in the week, with the 76.4% Fibonacci level ($1.4428) of particular interest for potential longs. Crucially, we would need to see a close below $1.4333 to create a double top and subsequently bring a bearish outlook.

USD/JPY breaks through key support
The pair has continued the recent downtrend, with the pair selling through the crucial ¥106.43 support level this morning. We retain a bearish outlook for a move down to ¥105.55, in accordance with the wider long-term downtrend.

However, the ¥106.43 level could be important as a potential new resistance level and thus any retracement towards this level will be watched closely. Unless we see an hourly close above ¥106.80, it makes sense to continue selling on retracements.

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