FX levels to watch: EUR/USD, GBP/USD and USD/JPY
Sterling in the limelight, as May’s expected exit drives GBP/USD lower yet again. Meanwhile, USD/JPY looks attractive after a decline into trendline support.
Will EUR/USD rebound signal beginning of bullish phase?
EUR/USD managed to rebound through the $1.1175 swing high yesterday, bringing an end to the short-term downtrend in place since the market topped out at $1.1263 just over a week ago.
That points towards a potential bullish phase coming into play rather than the break below $1.1135 and $1.1112. The key to that decline into the April low of $1.1112 is whether we can break below that May swing low of $1.1135. Given the rebound yesterday, it makes sense to await a break below $1.1142 to signal a continuation of the recent declines. Alternately, a more bullish outlook comes with a rise through $1.1188.
GBP/USD rebound proves short-lived after May lays out new proposal
GBP/USD has resumed its downward trajectory today, with UK Prime Minister Theresa May’s new ‘bold’ Brexit plan being brushed aside just like her past four proposals.
This looks like the last nail the coffin for the prime minister, with fears of a harder form of Brexit growing. The shallow rebound seen this morning provide us with an ideal area to put out stops, with a bearish outlook in place unless we break through the $1.2719 swing high.
USD/JPY declines into trendline support
USD/JPY has drifted lower overnight, with the pair taking a breather from the recent uptrend.
However, with the price falling back into trendline support, the bullish theme looks set to continue before long. Certainly, if we saw a break below the ¥109.81 swing low, things would look different. Until then it looks likely we will see the pair turn higher in the near future. For further confirmation, look for a rise in the stochastic back up through the 20 mark.
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