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

Last night’s Federal Reserve minutes kept the impression of a hawkish Fed, leading to us seeing some dollar strength so far this morning.

Euro and US dollar notes
Source: Bloomberg

GBP/USD rally fizzles out

The rally from the week’s lows has run out of steam at $1.2350, mimicking the price action we saw at the end of December. The services PMI reading today will be the key moment, perhaps restoring the bullish momentum seen in recent sessions.

Buyers need to keep the price moving above $1.2350 to then target $1.25. A failure to hold $1.22 would target $1.2050.

EUR/USD price action mimics the tail-end of December’s

Here too the price action from the end of December has been broadly repeated. A push through the key $1.0525 area is being met by heavy selling, so while the pair remains in an uptrend from the lows around $1.0380, it needs to avoid a daily close below $1.0450. A move through $1.0550 would head towards $1.0647. 

USD/JPY yen strength returns

Despite last night’s Federal Reserve minutes broadly maintaining the hawkish view from the December meeting, yen strength has returned. The key short-term area to watch is ¥116.40, the lows from late December.

So far a push below here has been met with buying, with support emerging at ¥115.59, so if ¥116.40 holds we could see a move back towards ¥117.50. A drop through ¥116.40 would first test ¥115.59 and then head towards ¥114.34. 

AUD/USD bullish momentum slows

After rallying heavily since the beginning of the year, we are seeing some of the bullish momentum dissipate here. However, the uptrend should hold unless we break the $0.7242 area, the highs from the end of December.

Dip buyers may get a chance to enter if this weakness persists, with a move through resistance at $0.7333 likely to open the way to $0.7425 and the 50-day simple moving average.

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