FX snapshot – EUR/USD, GBP/USD, EUR/GBP, USD/JPY

The US dollar is showing tentative signs of returning following brief respite last week.

Pound and dollar
Source: Bloomberg

EUR/USD back near key support

EUR/USD has been consolidating over the past three trading days, with price bouncing from $1.0565 support on three occasions. This level will be key to understanding when the pair finds a clear direction once more.

With the pair setting consecutive lower highs, this has the properties of a descending triangle, which points towards a likely break through $1.0565 support.

A closed hourly candle below $1.0565 would provide the bearish signal that seems likely to spark the next leg lower in accordance with the primary downtrend. Support levels of note are at $1.0565, $1.0553 and $1.0520.

A close above $1.0605 would point towards a continuation of this consolidation, with resistance levels of $1.0628 and $1.0641 in view.

GBP/USD caught between support and resistance

GBP/USD has sold off overnight to the $1.5027 support level (6 November low) following on from the bearish triangle breakout on Friday. There is a clear downtrend in play over the past week and this seems likely to continue should price close below $1.5027.

Notable resistance of $1.5053 seems likely to cap any upside moves and as such the bearish sentiment remains and would be confirmed by a closed candle below $1.5027. Support levels in view are $1.5027, $1.5000 and trendline support (currently $1.4979).

Alternately, a move back above $1.5070 would point towards continued consolidation, with further resistance at $1.5074 and $1.5107.

EUR/GBP continues grind higher

Last week saw EUR/GBP post its first weekly gain out of seven and this temporary uptrend seems likely to continue apace as we move through Monday.

The hourly chart shows that price has currently seen support at the 50-hour simple moving average and is moving on towards trendline resistance. While there is no way to say for certain that the buck will stop with the SMA, another move seems likely given that we have this uptrend in play.

A close above the £0.7046 level would be expected to bring a move up towards £0.7053 resistance, with the bullish outlook remaining unless price closes back below £0.7023.

USD/JPY breaking into uptrend

USD/JPY has managed to break through ¥122.72 resistance last week, with a retest of the level providing another leg higher this morning.

We are clearly moving into a more bullish phase and the fact that this current candle has not managed to sustain its initial losses seems bullish. A move back above ¥122.88 seems likely from here and from there the ¥122.93 and ¥123.00 resistance levels are in view.

This bullish outlook remains unless price closes below ¥122.68.

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