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

Dollar strength continues to dominate USD/JPY and EUR/USD, with GBP/USD the outlier as it stages a fightback against the greenback.

Dollar and pound
Source: Bloomberg

EUR/USD breaks lower once more

EUR/USD has continued its descent this morning, with price breaking below the key $1.0710 support level. That means we have now created a new 2016 low this morning. This break also provides the completion of a descending triangle, with another leg lower likely to ensue.

As long as we do not break back above $1.0759, then a sell-off looks like it is upon us. However, a break above $1.0759 would point towards either a retracement higher, or a continued period of consolidation. 

GBP/USD rallies into trendline resistance

GBP/USD has managed to gain ground overnight, rallying into trendline resistance. Crucially we have not seen price break through the $1.2529 swing high, thus meaning we could see further selling come in here.

The uptrend of recent weeks has come under pressure following the US election, with trendline support being broken as a potential precursor to a bearish break. However, we would need to break below the $1.2352 support level to become bearish for the medium-term.

That being said, on the short-term, as long as price remains below $1.2529, another move lower seems like a real possibility.

USD/JPY continues to charge higher

USD/JPY has been one of the most consistent markets following the US election, with the pair gaining over 8% since the initial election sell-off lows.

We are seeing that trend continue apace this morning, with price breaking to a new five-month high. As long as price does not break back below ¥1.0879, this uptrend looks likely to persist, with a bullish outlook remaining in place.

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