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

Both EUR/USD and USD/JPY have been largely consolidating at the start of play, with a government shutdown doing little to hurt the dollar. Meanwhile, the EUR/GBP pair is trading at a crucial support level.

Source: Bloomberg

EUR/USD consolidates around key support level

EUR/USD has been largely consolidating in early trade, with $1.2213 support being respected on a number of occasions. With that level representing both the neckline of a head and shoulders formation, alongside the 61.8% retracement, a break lower could see short-term downside.

However, with the wider trend pointing towards a resurgence for the pair, only a fall back below $1.2165 would bring a more bearish outlook. Until then, this recent sell-off looks like a retracement, with a break higher expected before long. Watch for an hourly close above $1.2257 for greater confidence that we are set to break higher from here. 

EUR/GBP back into double top neckline

EUR/GBP has dropped back into the crucial £0.8809 support level to start the week, with this key area playing an important role in determining where we go from here.

Watch for a potential break to the downside from here, with the wider descending channel formation coming into play. That being said, should we break lower from here, it is worthwhile noting the existence of an ascending trendline, dating back to 10 March 2016. Remember, this area is pivotal for the days ahead. As such, should we fail to break lower, it is likely that this will be the point where the price begins to turn higher once more. 

USD/JPY gaining ground from Fibonacci retracement

USD/JPY has begun to move higher, following a fall into the 76.4% retracement last week.

The ability to push through ¥111.48 would point towards a wider resurgence and retracement into the ¥112.16 region. Alternately, a break back below ¥110.19 support level would provide a signal that the bearish wider view is set to come back in play. 

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