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

All eyes will be on Mark Carney and the Bank of England today, with significant volatility likely in GBPUSD and other sterling crosses.

Euro and dollar notes
Source: Bloomberg

GBP/USD

Trading this pair today requires a healthy awareness of what might happen at midday when the Bank of England (BoE) announces. If we get no move, or only a 25 bps cut, which is largely priced in, then GBP/USD may actually continue to move higher, with an initial move back to $1.33 (yesterday’s high) and then on to $1.3465 and the bottom end of the 24/27 June gap lower.

A bigger cut to rates, and even some form of stimulus (although unlikely this early in the game) would see sterling weaken versus the US dollar, pushing below yesterday’s low at $1.31 and then on towards $1.2850. 

EUR/USD

For three sessions $1.1120 has proved to be the limit of EUR/USD bull’s ambitions. While the upward move from $1.10 remains intact, we need to see a firm push through $1.11 and then on to $1.12 to suggest the rally has not petered out.

A drop lower targets $1.1040, yesterday’s low, and then on to $1.10, last seen on 8 July. A break below here would head towards $1.09, the June low. 

AUD/USD

The rally goes on here, although we failed to see fresh highs yesterday. The first step is a push above $0.7640, which then clears the way to a test of the Tuesday peak around $0.7660.

A close above here would put the pair in good stead to head back to the $0.78 peak seen in April. Downside support lies at $0.7580 and then down at $0.7520.

USD/JPY

Further gains for IN_USDJPY mean we are seeing one of the strongest upward moves here in weeks. However, the pair is still stuck in a downtrend, which is likely to persist as long as it holds below ¥108.

Next resistance lies around ¥106.30, the 50-day simple moving average, and then on to ¥107, the downtrend line off the February highs.

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