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

The euro is looking to rally after yesterday’s pullback, while sterling is bracing itself for a period of key data releases.

Source: Bloomberg

EUR/USD gains to be expected

The pullback in EUR/USD has taken the pair back only to last Thursday’s levels, and now it looks to be turning higher once again.

From current levels the price will target $1.2040, and then on to the European Central Bank (ECB) day high at $1.2092. It makes sense to expect further gains from here unless we see a move back below $1.18.

GBP/USD set for highs

The rally for GBP/USD has faltered at $1.32, but this is more down to the key consumer price index (CPI) reading at 9.30am today, which is likely staying the hand of sterling bulls.

Given the powerful upward momentum seen of late, we would not be surprised to see buyers push the pair above $1.32 and send it back to the early August high of $1.3270. As before, it needs a break below $1.31 to negate the positive outlook here.

USD/JPY downtrend continuing

We have seen a bounce off oversold levels for USD/JPY, but the move from ¥107.50 may well be running out of steam. Anything below the early September high at ¥110.68 creates a new lower high, keeping the downtrend intact.

It needs a firm move above ¥110.68, and ideally back above ¥111.00 to indicate that the price may be turning higher on a sustained basis. 

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