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

It looks like the dollar is recovering its strength, which suggests a turn may be at hand for cable and eurodollar. 

Dollar and yen notes
Source: Bloomberg

GBP/USD rally looks like it may be at an end

The rally in cable from the 16 January lows may be at an end, with the price failing to get back above $1.26 over the past twelve hours. Bulls need to recover this level and then push on above $1.2660.

A weaker close below $1.25 today would raise the prospect that further losses lie ahead. Initial support is possible at $1.2426 and then down to $1.2250.

EUR/USD may be unwinding its rally

Heavy losses for EUR/USD yesterday raise the prospect the rally off the December lows is beginning to unwind. The close below $1.07 and below the 200-hour simple moving average ($1.0669) suggests we will see further selling, perhaps to $1.06.

It will be important to watch whether a rally in the next couple of sessions fails to break $1.07 and is met with further selling.

USD/JPY upward move looks to be intact

The pair has moved steadily higher over the past week, recovering the ¥115 level. Having moved 200 points higher in around 24 hours some weakness is to be expected, but so long as the ¥113.88 area holds then the upward move remains intact.

A break above the 19/20 January high at ¥115.64 would open the way to ¥117 and ¥119. 

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