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

The dollar has taken a breather after yesterday’s Fed meeting, with short-term rebounds for the euro, sterling and the yen looking likely. 

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EUR/USD tiptoes higher

A rebound here was certainly on the cards for EUR/USD, after some relentless moves lower.

But we will need a move back above $1.2150 to be sure that the buyers remain in charge. Otherwise, such a bounce could provide a fresh selling opportunity for those that missed the drop from $1.24. Any rally that fails to push on above $1.2150 would be another chance for the bears.

GBP/USD holds the 200-day SMA

Cable bears should be on alert for a possible rebound for GBP/USD too, but it may well be short-lived.

Any run that fails to move back above $1.38 would constitute a selling opportunity. The 200-day simple moving average (SMA) at $1.3539 has yet to be meaningfully tested, but if this is broken then $1.3320 would be the next level to watch for on the downside.

USD/JPY rally stalls

As expected, the Federal Reserve (Fed) meeting took some wind out of the sails of the dollar rally for USD/JPY.

Given how far the price has come in recent weeks it was always going to be tough for the Fed to keep the dollar moving higher. A pullback towards the rising trendline from the March lows would provide a possible buying opportunity, so we look for a dip towards ¥108.50. 

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