All trading involves risk. Losses can exceed deposits.

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

The dollar rally takes a breather, but are we set for another sharp move higher for the greenback?

All trading involves risk. Losses can exceed deposits.
Pound and dollar
Source: Bloomberg

EUR/USD retraces up to key resistance

EUR/USD has been selling off sharply throughout the week, with price crucially falling and closing below the critical $1.0462 level. This not only represented the low of March 2015, but also underpinned almost two years of consolidation.

With price moving back into this critical level, there is a chance we could see another strong move lower for the pair. An hourly close back above $1.0525 would negate this bearish view.

GBP/USD consolidating after sell-off

GBP/USD has been lacking direction overnight, as the pair consolidates in the wake of the significant weakness since Wednesday's Federal Open Market Committee meeting. Further downside seems likely, with the difficulty coming in where the retracement will end.

One view is that we are unlikely to see the pair break through $1.2456 resistance and as such the current price, resting on the 76.4% retracement, looks like an interesting area for shorts. However, a retracement into the $1.2511-$1.2523 zone would be a less risky trade, yet would have the possibility of not getting filled.

Either way, a bearish view remains in place unless we see price post an hourly close above $1.2568.

USD/JPY consolidates after rally

Recent weeks have seen significant gains for USD/JPY, with the pair rising 17% since its November low. The current consolidation is likely to result in yet another move higher for the pair and as such longs around the lower end of this consolidation look attractive.

So do longs upon seeing an hourly close above ¥118.66. In either case, a bullish outlook is in play unless we see an hourly close below ¥117.65

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.