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FX snapshot – EUR/USD, GBP/USD, EUR/GBP, USD/JPY

US dollar strength continues to drift, sparking EUR/USD strength and USD/JPY weakness. However, dollar strength seems just around the corner.

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Source: Bloomberg

EUR/USD tests resistance

The EUR/USD pair has been breaking to a new week’s high overnight, with the price selling off from last week’s $1.0833 support level. With the price currently drifting lower, we are likely to see further downside for the coming hour or so.

Crucially, yesterday’s candle closed on the $1.0808 July resistance level, and we would need to see a break and close above the $1.0808-$1.0833 resistance zone to bring expectations of further upside. With that in mind, the outlook remains bearish unless the price breaks higher. The long-term bearish outlook points towards a move back to $1.052 and $1.0462.

GBP/USD triangle in play

GBP/USD is trading within a symmetrical triangle, with the top marked by the October $1.5241 support level. Trendline and simple moving average (SMA) support (50-hour) is in play to the downside, whereas to the upside we also have trendline and SMA (200-hour) resistance in play. Thus a breakout above $1.5421 would bring likeliness of a move towards $1.5289 and $1.533 resistance levels. Meanwhile, a break and close below $1.517 would bring into play $1.5107 and $1.503 support.

EUR/GBP selling off once more

EUR/GBP is selling off following a brief bounce higher yesterday, with the price marginally breaking higher than the Wednesday swing high of £0.7104. The question is whether we create a new higher low for a strong move higher, or break back below £0.7038 support. A close above £0.7110 would bring a bullish outlook for the early part of next week, with £0.7129, £0.7154 and £0.7197 resistance in view. Alternately, a close below £0.7038 would bring bearish expectations, with £0.7026, £0.7, £0.6951 and £0.6936 key support levels. 

USD/JPY channels lower

The USD/JPY pair has been channeling lower over the past week, following a strong period of appreciation in the first week of November. Given the trend coming into this current pattern, a bullish breakout seems to be the most likely outcome. Thus a break out of this channel and through the first swing high (currently ¥123.08) would bring expectations of a move back to ¥123.60 and ¥125.28. Until that happens, the channel remains in play and we are likely to continue the drift lower. 

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