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

Both EUR/USD and GBP/USD are strengthening following periods of downside. However, with the threat of downside still looming, the longevity of such a rebound is worth questioning.

EUR/USD strengthening within triangle formation

EUR/USD sold off sharply from the crucial $1.1744 level last week, continuing the triangle formation that has been in play throughout July. With the 200-day simple moving average (SMA) up ahead, a break above that level would point towards a bullish start to the week, as the pair heads back towards the upper threshold of the triangle formation.

Ultimately, a break above $1.1744, or below $1.1574, would provide a breakout signal. Until then, the triangle remains key, with the price likely to head higher from here if the 200-day SMA is broken.

GBP/USD regaining ground after deep pullback

GBP/USD has posted a deep retracement, following on from the rally into the 76.4% resistance level. This points towards a potential period of downside, with a break below $1.3071 required to provide evidence of an impending period of further downside.

This morning we are seeing the pair rally through the $1.3131 resistance level, pointing towards further short-term upside. The question over whether such short-term upside breaks through the $1.3214 resistance level or not is going to be key to determining whether this is a short-term rebound or the beginning of a more bullish phase. 

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