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

Dollar weakness appears to be taking a breather, yet with a clearly defined directional bias established for EUR/USD, GBP/USD, and USD/JPY, there is reason to believe further USD weakness is around the corner.

EUR/USD consolidation likely to resolve higher

EUR/USD has been consolidating since the recent rally, with the price seemingly forming a descending triangle formation. This consolidation is unlikely to last, and unless the price falls below $1.1992, a bullish outlook remains in place.

With the $1.2026 support level marginally lower than today’s low, there is a good chance we will see a move higher from here. For greater confidence that such a move is in the offing, look out for an hourly close above $1.2066.

GBP/USD back into trendline support

GBP/USD has weakened into trendline support this morning, with the price breaking to a new three-month high overnight. With the price consolidating, there is a chance of short-term downside, but unless we see it fall below $1.3495, a bullish outlook remains in place.

Given the existence of a short-term support trendline, there is a good chance that we could see the price begin to turn higher in the near future. Furthermore, with the stochastic dropping back into the 34 region, the continuation of recent respect around that level points towards a near-term recovery. 

USD/JPY retracing after fall into key support

USD/JPY sold off into the critical ¥112.03 level yesterday, with the price forming a rising wedge since. That support level denotes the neckline of a potential double top formation, where a convincing break below that level provides a bearish wider outlook for the pair.

We would need to see a rally up through ¥112.79 to negate the bearish outlook in play. However, given the current respect of the ¥112.03 support level, it may make sense to await a break for confirmation.

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