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

Sideways price action for EUR/USD and GBP/USD looks likely to resolve with further downside. Meanwhile, USD/JPY has rallied into Fibonacci support, bringing a heightened risk of a short-term retracement.

EUR/USD consolidating after fall into Fibonacci support

EUR/USD has been trading largely sideways, following a drop into the 76.4% retracement of the $1.1554-$1.2556 rally. The wider context shows that there is the potential for this market to continue this period of weakness and get out of a long-term uptrend by breaking below $1.1554.

However until that happens, we also have an 18-month uptrend to contend with, and this 76.4% level is going to be key in seeing whether we are likely to hold up or continue the short-term decline. A break below $1.1790 would therefore point towards a heightened chance that we are seeing a long-term bearish reversal, while a rally from here would signal a potential recovery in line with the uptrend in play since late 2016.

GBP/USD consolidation turning bearish

GBP/USD remains within a consolidation phase, yet with the broadening formation becoming less relevant, there is a bearish picture building, given the inability to create higher highs.

The sideways price action seen in this period of dollar strength highlights that the pound is actually doing relatively well of late. However, we could finally see a break lower if recent price action is anything to go by. Watch $1.3445 as near-term support, with the 76.4% retracement of $1.3354 below that.

USD/JPY reaches 61.8% retracement

USD/JPY has managed to climb into the 61.8% Fibonacci retracement amid a rebound in the pair over the past two months.

This points towards the potential for a near-term retracement. However, we would need to break below ¥108.64 to signal a bearish shift and the completion of this upward retracement. Until then, further upside seems likely. 

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