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

The dollar has been strengthening over recent trading days. However, with countertrend moves coming into play this morning, it could be in retracement mode for the time being.

Source: Bloomberg

EUR/USD likely to head lower before long

EUR/USD fell below the key $1.1606 support level on Friday, with the price failing to really follow through on that move quite yet. This points towards the possibility of a short-term move higher.

However, should that occur, it would be seen as a selling opportunity, with a bearish view in play unless we move back above $1.1691. We do not know whether we will see a retracement in the short term and, as such, watch for an hourly close below $1.1595 to highlight the possibility of a break lower. In either case, further downside is the outlook going forward. 

GBP/USD attempts to move higher

GBP/USD is regaining ground this morning, following on from a move back into trendline support that makes up the bottom end of a broadening formation.

The ultimate direction of this market is likely to be to the downside, yet for now the market remains in consolidation mode. To the downside, the key level we need to break is $1.3030. To the upside, a break through $1.3133 would point towards a more protracted move higher within this broadening formation.

USD/JPY hits seven-month high

USD/JPY broke through the crucial ¥114.50 resistance level overnight, forming a new seven-month high for the pair. This provides a strong possibility of a bullish breakout from here. With the price currently pulling back, the key is whether we see a move back below ¥113.53 or not. A move below that level would point towards the potential beginning of a bearish phase.

However, looking at things on a shorter sense, we also have the ¥114.00 intraday swing low to look out for, with trendline support currently providing the possibility of a bullish move higher.  A move below ¥114.00 would point towards a deeper retracement of the ¥113.53-¥114.73 rally. However, ultimately we are looking for either a break back up through ¥114.73, or below ¥113.53 for direction. 

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