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

The dollar is expected to continue on its rebound, with EUR/USD, GBP/USD and USD/JPY all moving in favour of the greenback. However, with GBP/USD reaching an interesting support level, will we see the buyers come back in?

Pound coin and dollar notes
Source: Bloomberg

EUR/USD pullback continues amid stronger dollar
​The pair managed to break through the key $1.1326 support level yesterday, signifying the likeliness that this pullback is going to be a more protracted affair. We are clearly trending higher over the medium-term, yet for the short-term, we are now making lower highs and lows.

As such, while a bullish resurgence is expected between now and last Friday’s low of $1.1137, this sell-off looks to have legs. Thus a bearish short-term view is in place with the next key support levels at $1.1276 and $1.1250. However, an hourly close above $1.11337 would negate this view, bringing us back into the medium-term uptrend.

GBP/USD continues to grind lower
​The pair has been gradually selling off this week, with the pair creating a falling wedge over the past 24 hours. This is typically a bullish pattern and given the fact that the pair is seemingly just retracing the rally from Monday and Tuesday, it seems likely the buyers will come back in soon.

The 76.4% Fibonacci retracement is of particular interest ($1.4428), with a good chance we could start seeing the buyers come back in around that level. This bullish view is in place unless we see an hourly close below $1.4355.

USD/JPY breaks out of downtrend
​The pair has managed to break out of the short-term downtrend that has dominated trading since topping out on Tuesday. The break through ¥106.80 resistance now puts us on a more bullish short-term mindset, with any move lower looking likely to represent a retracement of the overnight move.

Given the previous respect of Fibonacci levels, watch out for ¥106.76, ¥106.64 and ¥106.49 alongside previous resistance at ¥108.80. This view would be negated with an hourly close below ¥106.26. 

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