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

EUR/USD and GBP/USD are now firmly set back on their downtrends, with USD/JPY reaching an absolutely critical crossroad.

Euro and dollar notes
Source: Bloomberg

EUR/USD continues to tumble
EUR/USD is clearly trending lower, with both the short-term and medium-term outlooks marrying up to point to further losses. The current extended nature of this move lower means it makes more sense to await a retracement for entry rather than jumping in now.

However, regardless of entry, a bearish view remains in play unless we see an hourly close above $1.1080. The next key support level is $1.0971.

GBP/USD weakness looks set to continue
IN_GBPUSD is also trading in a manner which conforms to the wider weakness story. Thus with both short and medium-term views converging, it is an ideal time to look for shorts in GBP/USD.

Yesterday saw the creation of a head and shoulders pattern and crucially we saw a close below $1.3105. Price action is currently consolidating, which could lead to a retracement given how overextended we are on the stochastic oscillator.

However, as long as we do not see an hourly close above $1.3315, a bearish outlook remains for a move down to $1.3000 and $1.2800.

USD/JPY wedge points to potential reversal
IN_USDJPY is gradually moving higher, with the pair approaching the crucial ¥106.84 resistance level. Essentially this level is absolutely massive, as a break through it would represent the first higher high on the daily timeframe in eight months.

As such, this would negate a long-term downtrend. Bearing in mind the gravity of such a break through ¥106.84, the fact that we are seeing a bearish rising wedge in play provides a clue that we could potentially roll over once more.

The safest indication that we are turning over once more would be an hourly close below ¥104.59. However, for now it is worth noting we are trading within a bearish pattern, within close proximity of a critical resistance level and as such, today is likely to provide a directional bias for the coming days and weeks.

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