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

The dollar has come back into favour after a period of weakness. However, we are seeing mixed fortunes, with only GBP/USD providing a clear bearish story, while USD/JPY and EUR/USD could remain on their dollar weakness trends unless key levels are broken.

Euro and pound coins
Source: Bloomberg

EUR/USD falls towards key support level

EUR/USD has sold off sharply over the past two days. Despite early gains at the open on Monday, we have seen the pair moving back towards the crucial $1.0760 support level. The pair needs to maintain the price above that level to remain within an uptrend.

While we are seeing significant losses in play, it is worthwhile noting that there is a good chance we will see the pair turn higher once more if it fails to break below $1.0760. Conversely, an hourly close below that level would likely pave the way for a more bearish period for the pair. 

GBP/USD turns lower on Brexit fears

GBP/USD has sold off sharply ahead of today’s activation of article 50. We certainly knew this was coming, yet despite that, there has been an element of selling as the dollar comes back into strength and the pound comes under pressure.

The hourly chart shows that we have broken below the key $1.2424 swing low, which is subsequently being utilized as new found resistance. Clearly the uptrend has been broken, which points towards further losses. As such, shorts are preferred as long as the price remains below the $1.2463 resistance level.

Will USD/JPY rally last?

USD/JPY has also moved in favour of the greenback, with the price rallying sharply towards the crucial ¥111.60 resistance level. That represents an important support level from early-February, which once broken points towards substantial losses.

As such, we would need to break back above that level to negate the bearish outlook. Until that happens, there is a chance we could see the safe haven yen pull this pair lower. With the stochastic at overbought levels, it is worthwhile noting its success as a bearish signal over the past two-months. Typically a break back below ¥80 has provided a strong sell signal. Will this happen once more?

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