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I’m looking at a mix of long-term and short-term plays on EUR/JPY, GBP/JPY, and EUR/GBP this week, and it looks like European currencies are on the back foot lately.

EUR/JPY

EUR/JPY 1-hour Forex Chart
EUR/JPY 1-hour Forex Chart

It looks like a downtrend is starting to form on EUR/JPY as the pair is moving inside a falling channel on its 1-hour time frame. Price just got rejected on its rally to the resistance, so another move towards support might take place.

For now, the pair is stalling at the mid-channel area of interest and a bounce off this level could pave the way for another test of resistance around the 132.25 area. Stochastic has room to fall before indicating oversold conditions but is also starting to pull higher to hint at a return in bullish momentum.

  • WO: 132.19
  • Top WATR: 133.24
  • Bottom WATR: 131.15
  • PWH: 133.08
  • PWL: 131.84

GBP/JPY

GBP/JPY 4-hour Forex Chart
GBP/JPY 4-hour Forex Chart

Yikes! It looks like the area of interest I’m watching on Guppy is staring to cave as pound bears have the upper hand these days. Price has already closed below the 38.2% Fib and 148.00 handle, which means that it could retreat further to the 50% Fib at the 146.00 mark.

Stochastic is already indicating oversold conditions, which means that sellers might need to take a break soon and let buyers take over. If so, GBP/JPY could still have a shot at climbing back to the swing high close to 153.00.

Fundamentals, however, seem to favor more downside for sterling as Brexit updates haven’t been so cheery for the U.K. economy. But even as PM May continues to lose support, data has shown some upside surprises that could still keep the BOE on the hiking track.

  • WO: 147.40
  • Top WATR: 148.95
  • Bottom WATR: 145.86
  • PWH: 150.98
  • PWL: 147.04

EUR/GBP

EUR/GBP 4-hour Forex Chart
EUR/GBP 1-hour Forex Chart

Between the European currencies, the euro has been faring much better than the pound, allowing EUR/GBP to surge past the double bottom neckline on its 1-hour chart.

Price has gapped down over the weekend to signal that pound bulls might put up a fight and take the pair for a correction. Stochastic is also turning lower from the overbought zone to suggest that a potential selloff might take place.

Applying the Fib tool on the latest swing low and high shows that the 38.2% retracement level coincides with the .8900 major psychological mark and the broken neckline.

  • WO: .8960
  • Top WATR: .9031
  • Bottom WATR .8889
  • PWH: .8993
  • PWL: .8801

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