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

All attention is focused on the yen, which continues to fly versus the US dollar. Meanwhile, sterling remains weak, as the overnight bounce fizzles out. 

Pound and dollar
Source: Bloomberg

GBP/USD

A dip through $1.4050 was swiftly bought yesterday, but the pair needs to push on back above $1.42 to suggest that the downtrend has run its course.

A failure to move on above $1.4170, which was resistance over the past two days, could signal that more downside is on its way, in the direction of $1.40 and lower. If $1.42 is breached then the next target becomes $1.4325, the high from 4 April.

EUR/USD

After days of testing the $1.14 area, the pair finally broke higher yesterday and has pushed on again this morning. Dips back towards $1.14 should bring out fresh buyers.

The next target to the upside becomes $1.15, above the peak from mid-October 2015. 

AUD/USD

Although the Aussie has rallied along with other risk assets, it has faltered just above $0.76. A move lower from here would push the pair back towards the low from Tuesday, just above $0.75, and then on down towards $0.7474.

If the pair holds above $0.76 then we look towards the peak from the beginning of the month, at $0.77, as the next target, and then the pair needs to make a new high to restore the upward trend.

USD/JPY

The pair has declined rapidly in recent days but for now support at the third weekly pivot at ¥108.70 is holding. If this breaks then the next real support on the daily chart is the October 2014 low at ¥105.20.

It would not be surprising to see a bounce materialise, but the inside trendline that was broken overnight at ¥109.30 will now provide resistance. Even if the price does rally above here the downward trendline off the late March highs will come into play around ¥110.

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