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

Dollar strength continues to dominate, with sterling experiencing a night to forget. A major break below key support for EUR/USD and NZD/USD seem to pave the way for further losses, with USD/JPY approaching a major resistance level.

EUR/USD chart
Source: Bloomberg

Following a night of incredible price action in sterling, we will let that market settle and focus upon some of the other more consistent charts.

EUR/USD breaks below crucial support level

EUR/USD has been working out really well of late, with the weakness we have been looking out for coming into fruition. The past 24 hours have seen the pair break both the $1.1138 and $1.1123 support levels, with the latter of particular importance. The bottom of a two-month descending triangle pattern is represented by $1.1123, which means we look set for a period of further weakness for the pair.

The retest of this level as new resistance adds further confidence of a continuation of this trend, with the only relevant support level in view coming at $1.1046 (August low). 

Yes, this sell-off could be deemed extended given momentum indicators and alike, yet the most important thing is price action and that continues to say sell. As such, further downside seems likely as long as we do not see a break back above $1.1125.

USD/JPY rallies into massive resistance level

IN_USDJPY has pulled back overnight, following an incredibly consistent rally this week. This retracement came perfectly into the 76.4% Fibonacci level, only to start gaining ground once more. From a wider perspective, this pair has broken through trendline resistance for the first time in 10 months, threatening to reverse the downtrend in place throughout 2016.

However, for that to be confirmed, we would need to see price break and hold above the first major swing high (¥104.32). Should we see a break through that resistance level, we could see this pair set up for a multi-month uptrend for this pair. However, until that happens, reversals are always a threat given how significant this level is. Conversely, an hourly close below ¥103.35 would provide us with a more bearish outlook. 

NZD/USD continues to fall after topping pattern

IN_NZDUSD has been moving lower in a consistent fashion since breaking below the key $0.7209 support level on Tuesday. The stage seems set for a protracted move lower and as such, any rally is perceived to be a better selling opportunity unless we break above a notable resistance level.

On this occasion, a bearish outlook remains in play unless we see an hourly close back above $0.7174. Until then, further downside seems to be on the cards.

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