FX Levels to Watch – EUR/USD, GBP/USD, USD/JPY

The big question of this week is whether the euro and sterling can maintain their recent strong momentum.

Euro and dollar notes
Source: Bloomberg

EUR/USD may go down quickly due to CoT at record level

A drop back towards $1.14 support could see further buying pressure, with upside targets at $1.1428 and then $1.1465. Given the strength of the rally, it seems wise to expect further gains for EUR/USD, although a close below $1.1350 could be a bearish development.

One note of caution for euro longs is that Commitment of Traders (CoT) data is at record levels on the long side. This means that unwind here could be very rapid, almost as quick as the move higher over the past quarter.

GBP/USD’s rally gets skittish

GBP/USD’s rally has become noticeably skittish around the $1.30 mark, and it has yet to breach the $1.3058 high. A move below the weekly pivot at $1.2921 would be a bearish development, and potentially mark the beginning of a deeper retracement.

A close above $1.3058 would cancel out this view, and suggest that a push in the direction of $1.3427 is in the offing.

USD/JPY – can it keep the momentum?

The apparent turn lower for USD/JPY last week was cancelled out with a rally on Friday, and now we look to see if the momentum can be sustained above ¥113.14.

The downtrend off the 2017 highs remains intact, however, unless the pair manages a close above the May high at ¥114.37. A close below ¥112.17 would suggest that the downtrend is reasserting itself. 

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