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

Dollar weakness is dominating this morning, with EUR/USD strength and USD/JPY weakness the dominant force. However, with key breaks for EUR/USD and GBP/USD, will this current upside simply represent short-term rebounds before we move lower yet again?

EUR/USD could fall once again after double top

Following on from the completion of a double top on Wednesday night, EUR/USD has been rallying overnight.

That break below $1.2205 points towards the potential for further downside, with a break above $1.2355 required to negate the possibility that we are simply seeing a retracement before we move lower once again. Until then, a short position in the zone between the 61.8% and 76.4% Fibonacci levels ($1.2278-$1.2308) looks attractive.

GBP/USD breaks below key support

GBP/USD managed to break below the crucial $1.3764 mark on Wednesday night, providing the pair with a lower high and lower low on the wider context.

This points towards further downside to come, with any short-term rebound likely to lead to further downside before long. That being said, we are likely to form a falling wedge pattern, providing a signal that the eventual breakout will come to the upside. A rally above $1.4070 would be required to signal an end to the current downside.

USD/JPY sells off following recent retracement

USD/JPY managed to turn lower from the 76.4% retracement earlier in the week, with the price approaching the ¥105.53 support level.

A break below there would form a new 15-month low. This is likely to be the case, with the downtrend remaining intact. As such, a bearish outlook remains unless we see a move up through ¥107.20.

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