FX levels to watch: EUR/USD, GBP/USD and USD/JPY
Sterling in the limelight, as May’s expected exit drives GBP/USD lower yet again. Meanwhile, USD/JPY looks attractive after a decline into trendline support.
Will EUR/USD rebound signal beginning of bullish phase?
EUR/USD managed to rebound through the $1.1175 swing high yesterday, bringing an end to the short-term downtrend in place since the market topped out at $1.1263 just over a week ago.
That points towards a potential bullish phase coming into play rather than the break below $1.1135 and $1.1112. The key to that decline into the April low of $1.1112 is whether we can break below that May swing low of $1.1135. Given the rebound yesterday, it makes sense to await a break below $1.1142 to signal a continuation of the recent declines. Alternately, a more bullish outlook comes with a rise through $1.1188.
GBP/USD rebound proves short-lived after May lays out new proposal
This looks like the last nail the coffin for the prime minister, with fears of a harder form of Brexit growing. The shallow rebound seen this morning provide us with an ideal area to put out stops, with a bearish outlook in place unless we break through the $1.2719 swing high.
USD/JPY declines into trendline support
USD/JPY has drifted lower overnight, with the pair taking a breather from the recent uptrend.
However, with the price falling back into trendline support, the bullish theme looks set to continue before long. Certainly, if we saw a break below the ¥109.81 swing low, things would look different. Until then it looks likely we will see the pair turn higher in the near future. For further confirmation, look for a rise in the stochastic back up through the 20 mark.
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