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

EUR/USD and GBP/USD are drifting lower, yet could easily turn higher once more given the recent rising channel in play. Meanwhile, the bearish USD/JPY picture is finally starting to bear fruit.

EUR/USD channeling higher towards 76.4%

EUR/USD has been gaining ground nicely this week, as the pair moves towards the deepest retracement of 76.4%. This period of upside was expected, yet the difficulty is in knowing whether we are retracing the short-term move of $1.1996-$1.1509 or the wider move from $1.2556. A break above $1.1996 would signal that wider move.

For now, there is a good chance of seeing another move higher before long, with a push into the 76.4% level expected. A break below $1.1652 would provide a bearish outlook. Until then, further upside seems likely in order to continue the short-term rising channel.

GBP/USD likely to turn higher once again

GBP/USD has similarly been channeling higher this week, with the price turning lower from the 61.8% retracement yesterday.

As the price moves into trendline support, there is a good chance we will turn higher from here. A break below $1.3371 would bring the wider bearish outlook back into play.

USD/JPY selling off after 61.8% retracement

USD/JPY is turning lower as expected, with the bearish outlook bearing fruit as we head into the close of the week. The previous break below ¥108.65, coupled with a tightening rising wedge formation, points towards a likely breakdown.

Now that we have seen the price fall below the ¥109.47 swing low, that bearish bias is likely to gather steam. With that in mind, bearish positions are favoured, with any short-term upside seen as an opportunity to get short at a more advantageous level. A break above the ¥110.27 mark would negate this view. 

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