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

The dollar appears to be coming back into favour this morning, with GBP/USD and EUR/USD both losing ground. However, with the greenback having suffered such substantial losses of late, is this just a breather before another dollar negative move?

Euro and dollar notes
Source: Bloomberg

EUR/USD pulling back within uptrend
EUR/USD has managed to break higher once more yesterday, with price moving above the 76.4% retracement convincingly. Considering the wider picture, a bearish view remains in place, yet it makes sense to await a bearish reversal sign that we have not seen yet.

Given that price is currently above the 76.4% mark, it allows us space to form a topping pattern while also obtaining a good entry. Ultimately, a bearish view is held unless we see an hourly close above 1.1418. The next important levels of support, which would need to be broken to undermine recent gains, are $1.1305 and $1.1236.

GBP/USD breaking lower from resistance
IN_GBPUSD is selling off sharply this morning, following a rally into the crucial $1.3175 resistance level. Price has since completed an intraday head and shoulders pattern, sending price down to trendline support.

There is a potential that this represents a reversal, yet for now we have not seen signs of this and therefore, we look at it as a temporary pullback before another move higher. 

USD/JPY consolidating in triangle pattern
IN_USDJPY has been consolidating since the downturn earlier in the week, with the pair forming a symmetrical triangle pattern. The breakout from the pattern will give us our lead, with an hourly close above ¥100.50 or below ¥99.84 providing the clues of where the pair is going next.

Given the bearish move into this pattern, the preference is for another move lower, with a break below ¥99.84 looking towards the ¥99.54 support level. Alternately, an hourly close above ¥100.50 would look towards ¥101.20 for a potential wider double bottom formation to come into play.

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