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

USD/JPY continues to fall, while the euro’s bounce refuses to slow. 

Pound and dollar
Source: Bloomberg

GBP/USD could head towards $1.21

Sterling strength has carried the pound all the way back to the current downward trend from the September highs. Having pushed out of its previous range the buyers now look to be in charge, although overbought conditions and today’s Bank of England report could mean we experience significant volatility and/or some profit taking.

The 10 October high at $1.2477 would seem to be the next target, while a move lower would head back towards $1.21 for GBP/USD.

EUR/USD eyes 200-day SMA

There seems little to stop EUR/USD at present, although the bulls now need to get the price back above the 50-day simple moving average (SMA) at $1.1133. Beyond this the target is still the downtrend line at $1.1179, coinciding with the 200-day SMA.

Even a dip towards $1.1050 might not necessarily signal the end of the current bounce, although longer-term the trend appears to be down. Only a move above $1.12 would begin to indicate that an uptrend is forming.

USD/JPY rally eyes ¥106.95

Hopes of a rally here have certainly been dashed. It now looks as if the pair could head back to the ¥100 area, where support entered the fray in August and September.

A rally needs to get back above ¥104.32 and then push on to ¥106.95 and the 200-day SMA. 

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