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

Dollar weakness is dominating, with GBP/USD and EUR/USD turning higher, while USD/JPY begins the sell-off once again.

EUR/USD could reverse higher after deep retracement

EUR/USD managed to stage a significant bounce-back yesterday, following on from a period of downside for the pair. Until we break below $1.2205, there is a chance we could move back onto the wider bullish trend.

The overnight sell-off has brought it back into the 76.4% retracement, with the price currently turning higher. A push through $1.2352 would bring greater confidence in a bullish shift for the pair.

Will GBP/USD break out of recent downtrend?

GBP/USD is also starting to push higher this hour, coming off the back of yet another rally into trendline resistance yesterday afternoon. This current move through trendline resistance brings about a heightened chance of a move through the $1.3989 resistance level.

Given the recent bounce from trendline and 76.4% support, there is a reason to believe we are about to see the beginning of the next move higher for the pair. Watch for an hourly close above $1.3989 to gain greater confidence of this bullish shift.

USD/JPY looks set for next leg lower

USD/JPY is moving sharply lower this morning, coming off the back of a short-term ascending channel formation into ¥107.14 resistance.

With a downtrend in play over the second half of this week, there is a good chance we will see further downside from here, with a break below ¥106.59 looking likely. A break above ¥107.14 would raise questions over the longevity of this current move lower.

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