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. 

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