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

The markets find themselves caught between the Bank of Japan and the Federal Reserve, with the outlook now dependent on what Janet Yellen says this evening.

Dollar and pound
Source: Bloomberg

GBP/USD eyes 50-day SMA

Another dive yesterday keeps this downtrend ticking along for the pair, although clearly there will be some hesitancy around the Fed meeting today. Short-term support is possible around yesterday’s lows of $1.2945, but a break below here opens the way to $1.2880 and then $1.2790.

Any bounce needs to clear the 50-day simple moving average (SMA) at $1.3159 to indicate that a turnaround is in progress. 

EUR/USD could see $1.1080

The pair has recovered from its lows but the downtrend remains in place. The $1.1123 mark continues to hold as support, so a break of this is the key level to watch, as this will take us down to the rising uptrend line for the year, potentially around $1.1080.

Rallies have been firmly sold over the past few days, so this may be replicated today. Any bounce has to clear $1.12, which provided a stumbling block earlier in the week.

USD/JPY could see ¥100

The excitement in IN_USDJPY has subsided for now, after a brief spike higher. With the Fed likely to duck a move on rates, we may see dollar weakness continue, even if ‘no change’ is what everyone is expecting.

The ¥101 - ¥101.50 zone has prevented further losses over the past few weeks, but with the BoJ out of the way now might be the time when the pair gets some downward traction.

A move through ¥101 takes us back to ¥100 and potentially onwards.

USD/CAD could look to 13 September low

The pair has run up against the 200-day SMA (C$1.3254) and may be on the cusp of rolling over. Three times over the past week, the pair has tried to push on through C$1.3250 and has been beaten back, so now we look to see if the C$1.3150 area, such vital support over the same timeframe, is about to give way.

If it does, then we look to the 13 September low at C$1.3029. 

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