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

Dollar weakness has been a key driver, with EUR/USD rising, while USD/JPY sells off. Meanwhile, EUR/GBP has seen significant selling, with the pair hitting a major support zone.

EUR/USD retraces after recent rally

EUR/USD is pulling back, after a week of gains that took the pair into a three-year high. This recent breakout from consolidation brings us back into the primary uptrend.

So far, this morning’s retracement has taken us into the 76.4% Fibonacci level. This is expected to bring about bounce, with a drop below $1.2384 required to negate this short-term uptrend. That being said, be aware that with the European Central Bank (ECB) meeting due today, there is a significant chance that Mario Draghi will seek to devalue the euro, raising the likeliness of short-term volatility.

EUR/GBP falls into crucial support zone

EUR/GBP has sold off sharply into the £0.8689 support level this week, with the price moving into the double top downside target.

This double top projection is coupled with the December low, and a descending trendline from late September to form a highly notable area of support for this pair. The wider descending channel context means we are likely to turn higher once more in the near future and, given the significance of this support zone, it is worth noting that we could see some form of reaction at this level. Should the price break £0.8689, there is the bottom end of the channel to contend with, around £0.8655.

USD/JPY rebounds after substantial sell-off

USD/JPY is seeing some marginal gains this morning, as the pair attempts to regain ground off the back of a substantial move lower thus far this week.

The ¥109.47 level is going to be key here, with a break through there pointing towards further upside. Until that happens, another move lower looks likely before long. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.