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

After days of ‘risk on’, are we at a turning point? USD/JPY may point to a return to the general downward trend, while cable and Eurodollar struggle to break out of current narrow ranges. 

Pound and dollar
Source: Bloomberg

GBP/USD could see $1.4150

Brexit talk will be in the air today, but so far GBP/USD has come to rest above the key $1.4230 level.

Gains have been contained by $1.4326, so this provides a clear range for future price direction.

Any bounce needs to clear $1.4439 and then push towards $1.4550, while downside moves will head towards $1.4150, the low from 29 January. 

EUR/USD could push to $1.1240

Here too a useful, if frustrating, range has developed. Gains above $1.1180 have been short-lived, while $1.1110 is capping any downside potential.

However, the fact that EUR/USD has managed to stem its decline off the month’s highs inclines us to the idea that it will start to push on higher, in which case we look to $1.1240 and then $1.1350.

USD/JPY could drop to low of the month

If the bounce here has run its course, as the failure to push on this week implies, then this has serious implications for the general risk-on tone we are seeing in markets.

Downside targets, should the low of yesterday’s session around ¥113.37 be breached, would lie around ¥112.47, and then on down to the low of the month around ¥111. 

AUD/USD could see descending trendline off December highs

What is needed to cement the rally is a close above $0.72, something that has been lacking all month so far for AUD/USD

A descending trendline off the December highs could well be the area that caps gains (around $0.7211), so if this continues to be the case we look to support around $0.71 and then down towards the $0.70 area. 

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