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

EUR/USD is finally seeing some weakness, while USD/JPY is looking to bounce after a huge drop yesterday.

Chris Beauchamp ChrisB_IG
Chief Market Analyst, London

Publication date : 2017-05-18T09:50:50+0100

EUR/USD notes

Source: Bloomberg

EUR/USD a pause is in the off for now

Bulls finally got a retracement in EUR/USD yesterday, with the small dip followed by more buying that took the pair to its highest level since 10 October.

Now some losses are being seen once again, but as long as the intraday price action does not breach the $1.1080 level that held yesterday the uptrend is intact. A bounce will need to break the overnight high at $1.1172 to maintain forward momentum, but it looks like a pause is in the offing for now.

EUR/USD chart

EUR/USD chart

EUR/USD chart

GBP/USD RSI continues to fall

GBP/USD has pushed back to the top end of its recent range, around $1.2970, but with no sign of further momentum, plus signs of deterioration on the daily chart as the relative strength index (RSI) continues to fall, it may be that a drop back towards $1.2850 and the bottom end of the range is in the offing.

Below $1.2850 the price could find support at $1.2775, which would also put it close to the rising trendline that has been in place since early March.

GBP/USD chart

GBP/USD chart

GBP/USD chart

USD/JPY pause or more of retracement likely

The demise of the USD/JPY rally from the April low, and with it the carry trade, is being viewed as one of the key suspects in the current market sell-off.

Signs of a bounce have been rudely interrupted by a swift drop back below ¥111, but given the magnitude of yesterday’s fall, a pause or more of retracement is likely. This could run as far as ¥112 or ¥112.50 towards the 50-hour simple moving average (SMA), before turning lower once again. A breach of ¥110.11 would target ¥108 and the April low.

USD/JPY chart

USD/JPY chart

USD/JPY chart

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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