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

The dollar rally comes under pressure, with a series of losses late last week. However, with the trend well defined, is this simply a short-term breather or are we set for a wider reversal?

Pound coins and dollar note
Source: Bloomberg

EUR/USD back at crucial resistance level

EUR/USD has regained ground to find itself back at the absolutely crucial $1.0462 resistance level. The shallow nature of this rally, set against the sharp deterioration on Friday makes it look like this could be a pause before we sell-off once more.

This bearish wedge pattern is expected to resolve to the downside, but with the huge support level in question, it could make sense for new shorts to only come with the break below $1.0400.

GBP/USD retracement could prove short-lived

GBP/USD has been rallying into a 70% retracement since the lows of Thursday. While the current sideways consolidation is likely to lead to another leg higher, as long as price remains below $1.2568, another move lower seems likely.

As such, look out for a potential pullback from $1.2523 (76.4%) should we get there. This bearish view remains unless we see a break back above $1.2568.

USD/JPY looks set for further losses

USD/JPY has managed to break below the key ¥117.65 support level late on Friday, bringing about a bearish short-term view with the current pullback representing a retracement of the rally from ¥114.77. That being said, unless we break below that level, this looks like a short-term pullback before we push higher once more.

Given the break below ¥117.65, we could easily see further short-term losses. However, this would simply represent an opportunity to get long at a better price. 

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