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

Risk currencies have enjoyed an impressive bounce, although whether it lasts remains to be seen. 

Pound coins and dollar notes
Source: Bloomberg

GBP/USD

We are around 2% higher from yesterday’s low just above $1.40. While the usual caveats about the referendum apply, it may be that cable has recovered and is now poised to move back towards the 50-day simple moving average (SMA) at $1.4433. Beyond this the next target is $1.47 and then highs from May.

The $1.40 mark remains the line in the sand on the downside, and a break below here still targets the February low at $1.3840.

EUR/USD

A bounce off the rising post-December 2015 trendline perhaps indicates the short-term drop of the past few days is at an end.

A push above $1.1 would likely act as catalyst for a move to the upside, perhaps to $1.14 and then beyond to $1.16 for EUR/USD.

USD/JPY

While the price has recovered to stand back above ¥104, the downtrend is still in place. However, a close higher today may indicate that a bottom is in place (even if the longer-term downtrend from the highs of 2016 is still firmly intact).

A first area to watch on the upside would be ¥106, and then to the 50-day SMA at ¥108.50.

A move down today below ¥104 and then below yesterday’s low at ¥103.50 would simply indicate that more downside is on its way, perhaps down to ¥103.10 in the first instance. 

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