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

The new week has begun with a rally for USD/JPY, while the Aussie remains under pressure. 

Sterling and US dollar notes
Source: Bloomberg

GBP/USD may begin the week with a bounce

The price touched the 50-day simple moving average (SMA) – $1.2658 – on Friday, for the first time since 16 September. Having retreated from overbought levels of Friday, we could see a small bounce into the beginning of the week. However, a steady progression of lower lows means that sellers are likely in charge.

The first target would be the 9 November lows around $1.2350, and below this $1.21.

EUR/USD losses continue

The decline goes on here, with the early January lows around $1.0714 now in prospect. However, with the pair now oversold on the daily chart and also intraday, chasing this move would be a high risk trade.

Instead, some may look to short any fresh bounces. A move back above $1.0825 is needed to begin to suggest a new leg higher is in prospect. A drop through $1.07 takes the pair on to the December 2015 low of $1.0525.

USD/JPY strength remains

USD/JPY shows no sign of stopping, with the pair now overbought for the first time since the beginning of October. The situation is a reverse of EUR/USD, with the price overbought in multiple timeframes.

This may continue for some time, but perhaps the better move is to wait for a retracement, perhaps towards Friday’s lows near ¥106.50, rather than chasing the current surge. The next real target on the upside would be ¥112, last seen at the end of May. 

AUD/USD could dip

Having broken the rising trendline on Friday, the pair has pushed back towards $0.7560 before starting to drop once again. The 200-day SMA at $0.7508 is now in sight, while a drop through here would take the price on to $0.7432. The low from 13 October is also $0.7510, so buyers may aim to mount a defence here. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.