FX levels to watch: EUR/USD, GBP/USD and USD/JPY
Recent trends have started to ease, with a set of weak US PMI readings sending the dollar sharply lower. Will this last?
EUR/USD rebounds into trendline resistance
EUR/USD rebounded off the back of a pair of weak US purchasing managers index (PMI) figures yesterday, bringing about an end to the losses in play throughout the week. However, this rebound is perceived as a short-term retracement unless we break through $1.1264.
As such, the respect of the 61.8% retracement and ascending trendline is notable for that narrative. Further losses look likely before long, with this confluence of resistance certainly looking like a good contender for that point of reversal.
GBP/USD consolidates after recent losses
The GBP/USD decline has slowed over the latter part of the week, yet further declines are a distinct possibility, as Theresa May is expected to lay the ground for her exit today, bringing a high likeliness of volatility when markets attempt to gauge who the new leader will be.
Watch for whether we can break through resistance at $1.2694 or not as a gauge of short-term sentiment. However, a break through $1.2814 would be required to bring about a wider bullish picture for the pair.
USD/JPY trendline breakdown signals potential wider declines
USD/JPY has broken out of its short-term uptrend, with trendline resistance ultimately bringing that upward surge to an end.
The break below ¥109.81 signaled an end to that bullish theme, with the pair subsequently falling into the next swing low of ¥109.49. Watch for a break below yesterday’s low of ¥109.45 as a bearish continuation signal. Alternately, a rally through ¥109.74 would signal a retracement coming into play as we head into the weekend.
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