FX levels to watch: EUR/USD, GBP/USD and USD/JPY
After some weakness over the weekend, FX markets are showing signs of reviving risk appetite, which may continue now that the US is back from its holiday.
EUR/USD back to channel support
EUR/USD’s fall has continued, but it is now nearing the bottom-end of the rising channel. If a bounce from around these levels takes place, a higher low in the uptrend from November lows has been created.
This might suggest a move back towards the top-end of the channel, around $1.157. A break below $1.132 would mark a significant change, putting the sellers back in control.
GBP/USD recovers from recent weakness
GBP/USD's overall upward trend from the lows of December continues, although it received a sharp check on Friday. However, the price continues to hold the 200-hour simple moving average (SMA) of $1.285, having bounced back above it yesterday.
This dip may see fresh buying, targeting $1.30 in the near term. A more bearish view could develop, but it would require a close below $1.28.
Dip in USD/JPY uptrend provides bulls with an opening
As with equities, USD/JPY's bounce has stalled over the past couple of sessions, but the uptrend is still in place.
The pullback from Friday highs has been met with buying so far this morning, with the price finding support around ¥109.35. If a higher low is created here, then the price moves back towards ¥110.00. A bigger retracement targets the ¥108.80 area and rising trendline support from the 10 January low.
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