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

Dollar strength dominates EUR/USD and GBP/USD trading as recent gains are unwound heavily. However, the USD/JPY rally is coming into question, with yen buyers falling away due to weakness across equities and crude this morning.

EUR/USD forex pair
Source: Bloomberg

EUR/USD tumbles heavily
EUR/USD is continuing to sell off heavily following a break below $1.1334 yesterday. While such a break was likely to result in significant losses, we have still not seen the signal needed to say the longer-term uptrend that has been in place since March is finished.

We would need a close below $1.1144 for that. Until then, the short-term bearish outlook persists, with the 76.4% Fibonacci retracement representing the final notable support level before $1.1144. As such, a short-term bearish view is held which would be expanded to a medium-term view should we break below $1.1144.

However, there is a chance of a bounce at $1.1214.

GBP/USD rolls over as sellers dominate
Dollar strength is dominating this pair too, with IN_GBPUSD breaking below the key $1.4197 support level leading to significant losses. Further losses seem highly likely, with support levels of $1.4057, $1.4041 and $1.4005 the next in view.

However, its worthwhile being cautious entering at such a point, given how extended this sell-off is. As such, retracements higher would be seen as bearish opportunities rather than any wider bullish shift in sentiment. 

USD/JPY rally slows
The IN_USDJPY risk-on rally is grinding higher, following the double bottom pattern completed yesterday. However, with crude and equity markets drifting lower this morning, there is a chance the yen could find a bid once more.

Fibonacci retracements have been well respected within this rally and thus it is worth watching them for possible support and resistance. The 61.8% overnight resistance highlights this.

Ultimately, this rally would only come into question with an hourly close below ¥109.02. Should that occur, ¥108.78 and ¥108.44 would be the next support levels of note. Otherwise, a closed hourly candle above ¥109.49 would provide a renewed bullish view for the short term, with the 76.4% pullback (¥109.94) the next resistance level to watch.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.