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

A busy macro day will help take some of the focus off Brexit, but overall the general tone of markets remains cautious at best.

Dollar notes and pound coins
Source: Bloomberg


A small recovery so far today has done little to dent the overall downward trend, and with a week to go until the voting begins it would not be surprising to see the negativity persist in GBP/USD.

A break below $1.40 would be the interesting moment, since it would open the way to the lows of the year at $1.3850. If the price can close back above $1.4250 we may see a bounce, but with so much still to come it will be a volatile ride either way.


A small bounce off $1.12 so far today has been quickly reversed, with a move below this level suggesting a test of the rising trendline, around $1.1130.

Further downside moves would take the pair towards the 200-day simple moving average at $1.1102, and then below this $1.10. A rally needs to clear $1.1250 in the first instance, and then make a daily close above $1.13.


The steady decline here in recent days has abated, but unless the price gets back above $0.7420, the default direction for the pair still looks to be down.

The next area to watch on the downside would be the 200-day SMA at $0.7269, and then below this the lows from the end of May at $0.7150. It looks like rallies will continue to be sold for the time being. 


We have seen the downward trend slow down for the pair, but a fresh lower low yesterday would suggest that another selling opportunity may be at hand, with an initial target of ¥105.50.

It would need a move back above ¥107 to reverse the current trend, although with the FOMC on the schedule for this evening and no policy move expected it is hard to envisage how the dollar can recover its strength. 

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