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

Yesterday’s ADP number was supposed to help the dollar, yet with GBP and EUR remaining resilient, we could be set for gains in EUR/USD and GBP/USD. Meanwhile, USD/JPY's uptrend continues to dominate.

Pound and dollar
Source: Bloomberg

EUR/USD continues to consolidate

EUR/USD is moving higher from the $1.0563 support level once more this morning, with the pair continuing to consolidate. We need to see a break from this range to provide the clues of where the next move will be.

Given the size of the sell-off prior to this range, there is a good chance we could see the market regain some of those losses. However, with a clear downtrend in place there is also a good chance we will see another leg lower.

As such, it makes sense to await a break above $1.0686 or below $1.0525 to gauge the next move. Until then, the range remains relatively consistent and thus could continue to dominate.

GBP/USD trying to break higher

GBP/USD is attempting to break free from its ascending triangle pattern this week, with price pushing above the $1.2532 resistance this morning. Up ahead lies two key resistance levels in $1.2557 and $1.2674, yet the trend clearly appears to be in favour of the pound.

As such, it makes sense to either buy a dip, or else buy an hourly close above $1.2557. We would need to see an hourly close below $1.2420 to negate this bullish view. 

USD/JPY weakness unlikely to last

USD/JPY is turning lower this morning, following on from yet another strong move higher earlier this week. Price is currently finding support at ¥113.80.

The ability to break and hold below that level is key to determining whether we will see a deeper retracement. Should that occur, we would be looking for longs around the ¥112.40-¥112.70 region.

In either case, as long as price remains above ¥111.45, a bullish outlook remains in play.

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