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

EUR/USD and GBP/USD are both looking highly likely to continue their descent, while USD/JPY manages to find a bounce amid a wider sell-off.

EUR/USD forex pair
Source: Bloomberg

EUR/USD sells off once again

EUR/USD saw significant volatility on Friday, following an impressive payrolls number. Despite the typical wide swings, we have seen the market settle down and gradually resume its descent.

Overnight we have seen trendline resistance hold, leading to another leg lower and the creation of a short-term double top (neckline at $1.1033). With this break lower having created a new lower low, there is a potential for another bounce from $1.1024 support.

However, an hourly close below this level would provide a good chance for further losses. Whether we get a bounce or not, a bearish view remains unless we see an hourly close above $1.1060.

The next support level below $1.1024 is Friday’s low of $1.1002 which corresponds with the $1.1000 handle.

GBP/USD expected to fall once more

IN_GBPUSD is trading within a symmetrical triangle formation, as we move into the fourth day of consolidation for the pair.

Given the selling pressure coming into this pattern, another leg lower seems the likeliest eventuality upon seeing the breakout. For the breakout to be confirmed, an hourly close below $1.2908 or above $1.3019 would be required.

However, given the medium-term bias, we prefer to look for short positions on any short-term rally below $1.3019.

USD/JPY rally moving towards Fibonacci entry

IN_USDJPY is rallying heavily this morning, with the break through ¥101.46 pointing towards further gains for the short-term. However, given the wider downtend in play, it seems likely this is simply a precursor to another move lower.

With that in mind, a move into the 76.4% retracement would seem like a good area to short this pair, with this bearish view negated should we see an hourly close above ¥103.40.

The past 40 days has rarely seen price move above the 50-period simple moving average and as such, we are not expecting to see this pair remain so elevated for too long.  

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