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

The dollar has been strengthening against the euro and pound, yet there are key levels to be broken to signify directional bias for the likes of GBP/USD and USD/JPY.

EUR/USD drifting lower after recent rally

EUR/USD has begun to drift lower during the latter part of the week, heightening the chance of a wider retracement coming into play once again.

A break below the $1.1484 support level would signal a likely impending retracement of the wider rally from $1.1301. However, until that happens, there is a good chance that we will continue the short-term uptrend that remains in play.

GBP/USD rolling over after failed rally into resistance

GBP/USD failed to break through the $1.2812 resistance level earlier in the week. That provides us with a signal that we could see the pair roll over once more, with a trendline break seen this morning adding to that possibility.

Watch for an hourly close below the $1.2706 level for confirmation of a short-term bearish outlook.

USD/JPY awaiting break to signal next move

USD/JPY is turning lower again this morning, following on from a rebound yesterday.

There is a good chance we will see further gains to come over the medium term, yet with the sharp rally seen in the first week of the month, a deeper retracement before such a rally looks a distinct possibility. As such, watch for a break below ¥107.77 as a bearish short-term signal for the pair. Conversely, a rally through ¥109.09 would signal a bullish view from here.

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