EUR/USD and GBP/USD rally, while USD/JPY is at risk of a turn lower

Risk appetite has revived across forex markets, lifting both EUR/USD and GBP/USD.

EUR/USD on the up for now

EUR/USD has recovered from the lows of Friday and Monday, but - having rallied 150 points - may now be at risk of creating a lower high.

If the price fails to push on above $1.135 then bearish pressure may resume. Alternatively, we look for a move through $1.135 to clear the path for another challenge of $1.14, which marks the highs of last week. Above here confirms the ongoing rally in this pair. A drop towards $1.12 may see this support from Friday tested again, and below here lower lows will confirm that a more bearish picture is emerging.

GBP/USD breaks through trendline resistance

Like stocks, GBP/USD has rallied sharply in the past 24 hours and while upward momentum is fading, the sellers seem to have lost control for the time being.

The rally from Monday’s lows took out trendline resistance from last week’s highs and while the price edges lower, any low that holds above this trendline is likely to prove to be another buying opportunity. A rally through $1.27 will open the way to $1.28, the highs from last week, while a more bearish view requires at least a reversal below $1.25 and then a move below $1.245.

USD/JPY struggles at resistance

We have witnessed a tentative bounce in the USD/JPY price, although gains have now stalled below ¥107.50.

Rising trendline support has held since Friday, while a reversal below ¥107.00 would start to dent the bullish view, and bring ¥106.60 into view. Alternatively, a rally through ¥107.50 suggests the buyers remain in charge, and will target ¥108.60 and higher.

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