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

The euro remains stuck in a downtrend, while the pound is looking to push higher against the dollar.

Source: Bloomberg

EUR/USD could face further weakness

Having gapped lower and then rallied, the price remains in a downward channel for EUR/USD. An early spike this morning has been sold into, suggesting further weakness ahead.

A test of the bottom end of the channel might suggest a move back down to $1.17. A rally would encounter resistance at the top end of the channel near $1.1780.

GBP/USD in a steady uptrend

GBP/USD continues to be hampered by the $1.3268 level, which constrained further upside yesterday and is doing the same today.

However, the price is within a steady uptrend from the lows of last Wednesday, so until we see the $1.3220 area broken, the sequence of higher lows remains in place. A push above $1.3220 would target the $1.33 area, and then $1.3341.

USD/JPY downtrend yet to be broken

A recovery for USD/JPY yesterday has not been able to break the downward trend seen in November so far. Indeed, the rally to ¥112.64 merely created a new lower high and, with stochastics so heavily overbought, the bears took the opportunity and ran with it.

Further declines would target yesterday’s low at ¥111.95, and then on down to the crucial ¥111.68 area. If the buyers can rescue the situation, then we look for a push above ¥112.70, and then on to ¥113.20.

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