FX levels to watch: EUR/USD, GBP/USD and USD/JPY
Sterling is the big loser this week, with political concerns driving the pound lower. Meanwhile, the dollar rally is expected to continue to impact the likes of EUR/USD and USD/JPY.
EUR/USD declines into crucial support level
EUR/USD has continued its declines this week, with the pair falling into the $1.1135 swing low to heighten the chance of further downside.
The wider downtrend of lower highs and lower lows remains in place, pointing towards a break below $1.1112 before long. However, the ability to break out of the recent trend of higher lows was required. We now have that. Watch for whether we can break below this $1.1135 support level or not, with a rebound expected to be a retracement of the decline from $1.1264. It makes sense to watch for the response to this level, with the pair expected to break below this level either now or in the near future.
GBP/USD continues to decline amid political upheaval
UK Prime Minister Theresa May’s time as prime minister looks to be over, and sterling seems to be going down here. Significant market uncertainty means we will likely see further downside to come from here for GBP/USD.
The continued creation of lower highs and lows points towards a downtrend which is expected to continue for some time yet. There is talk of markets selling the rumour and buying the fact, bringing about a chance of a GBP rebound once she goes. However, it makes sense to simply follow the chart rather than speculate. The creation of lower highs remains key here, and thus as long as we remain below the $1.2695 level, a bearish outlook remains in play.
USD/JPY declines beyond trendline, yet bulls wait to pounce
USD/JPY has continued to drift lower over the past two days, with the price falling below trendline support.
However, that does not necessarily negate the uptrend that has been in play on the intraday charts. The creation of lower highs and lows is key here, with a break through the ¥110.36 level key to providing a more bullish outlook for the short term. Be aware that we have a long-term descending trendline up ahead as resistance. However, until we break below ¥109.81, the short term uptrend remains intact.
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