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

The French election has given risk assets and the euro a boost across the FX markets. Will this mark the beginning of a strong move for the likes of the yen and euro, or is it just short term?

Euro notes
Source: Bloomberg

EUR/USD breaks higher after election result

EUR/USD has gone up this morning, after the French election pitted Emmanuel Macron against Marine Le Pen. While this was widely speculated, Macron is the strongest candidate for other candidates’ voters to rally around, thus bringing a high likeliness that France will remain in the EU.

Looking at the chart, initial EUR/USD gains have faded somewhat. The price is now returning upwards, with the $1.0899 level key to proving that we have further upside to come. It is worth noting that we need to see a break through $1.0906 to continue the wider uptrend that has been in place since the beginning of 2017.

GBP/USD looks primed for next move higher

GBP/USD has been gradually drifting lower since Tuesday’s high, following a bullish breakout from a long term symmetrical triangle. Given that triangle breakout, alongside the recent price action utilising the key $1.2775 historical resistance level as support, it looks like we are set for another move higher.

Look out for a break through trendline and 1$.2862 for a bullish breakout signal. 

USD/JPY rally could bring selling opportunity

USD/JPY has seen a sharp jump at the open of trade this week, with markets moving out of risk assets such as the yen. However, looking at this chart from a wider perspective, we have a clear downtrend in play since the turn of the year.

With that in mind, there is a good chance that this rally could hit the buffers, with the 70-76.4% retracement zone looking particularly interesting for shorts. So far the 61.8% retracement marks the top of this morning’s trade, yet further short term upside is likely to come into play to provide a better selling opportunity. We would need to break through ¥111.58 to negate the bearish medium term view.

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