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

EUR/USD is finally seeing some weakness, while USD/JPY is looking to bounce after a huge drop yesterday.

EUR/USD notes
Source: Bloomberg

EUR/USD a pause is in the off for now

Bulls finally got a retracement in EUR/USD yesterday, with the small dip followed by more buying that took the pair to its highest level since 10 October.

Now some losses are being seen once again, but as long as the intraday price action does not breach the $1.1080 level that held yesterday the uptrend is intact. A bounce will need to break the overnight high at $1.1172 to maintain forward momentum, but it looks like a pause is in the offing for now. 

GBP/USD RSI continues to fall

GBP/USD has pushed back to the top end of its recent range, around $1.2970, but with no sign of further momentum, plus signs of deterioration on the daily chart as the relative strength index (RSI) continues to fall, it may be that a drop back towards $1.2850 and the bottom end of the range is in the offing.

Below $1.2850 the price could find support at $1.2775, which would also put it close to the rising trendline that has been in place since early March.

USD/JPY pause or more of retracement likely

The demise of the USD/JPY rally from the April low, and with it the carry trade, is being viewed as one of the key suspects in the current market sell-off.

Signs of a bounce have been rudely interrupted by a swift drop back below ¥111, but given the magnitude of yesterday’s fall, a pause or more of retracement is likely. This could run as far as ¥112 or ¥112.50 towards the 50-hour simple moving average (SMA), before turning lower once again. A breach of ¥110.11 would target ¥108 and the April low. 

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