EurUsd The cup and handle pattern we noted on the hourly chart yesterday is panning out very nicely (having hit a high of 1.3509), and despite some profit taking this morning, we are still well over 100 pips in the money en route to our ambitious target of 1.4035. As discussed yesterday, we chose to play this pattern by going long on the break out from the handle's range (around 1.3340), but there is still scope for players to get on board this pattern on the re-test of the cup's rim around 1.3457. Given the immense distance to the target there's obviously plenty of levels noted on the topside before us; today's high 1.3509 is the first, followed 1.3635 (23 Nov high), 1.3785 (22 Nov high), 1.3825 (10-11 Nov highs), and 1.3975 (9Nov high). Supports remain at 1.3245 (Monday's high) and 1.3145 (12 Jan high former resistance).Below there we have a large gap before major support at 1.3085 (the 29 Dec pivot and 13 Jan low).

 

GbpUsd The eye-watering CPI figure out of the UK yesterday (+3.7% YoY) sent GBPUSD rocketing through 1.6000 resistance level to highs of 1.6060, but further gains were smothered by the upper edge of the 2-week uptrend channel. We have since pared back towards 1.6000 levels, but in our view, this uptrend still looks in fine form, so buying on dips remains the strategy of choice. The topside is looking very clear for further progress, as the next resistance is only noted at 1.6095 (19 Nov high), with another long gap before we hit 1.6185 (9, 10 & 12 Nov triple high). Buyers on dips are likely to be everywhere, so watch for near-term support at 1.5930 (the overnight low), 1.5870 pullback area seen late Monday, 1.5810 (14 Jan low), 1.5785 (former resistance now turned support), and 1.5718 (13 Jan low).

UsdJpy The grind lower has continued for USDJPY, meaning we have now taken out the remaining supports at 82.35 (Monday's low) and 82.20 (the lower edge of the 2-week downtrend channel). We expect further sellers to take interest in the dip below 82.35, and so expect a return to 81.70 (4 Jan European/US session low) in due course. Should the downward momentum persist, there is the possibility of an extended move to 80.95 (31 Dec low), 80.24 (31 Oct low), and the all-time low from 1995 at 79.75. First resistance is yesterday's high 82.83, Friday's high 83.05, the upper edge of the 2-week downtrend channel at 83.10, 83.50 (11 Jan high), 83.70 (7 Jan high), and the formidable old range ceiling from early December at 84.40. This latter level managed to contain numerous rallies back on 29 Nov, 1 Dec, 2 Dec, 8 Dec, 13 Dec and 16 Dec -so it's likely to be a stubborn barrier should we manage to get back up there.

UsdChf As USDCHF bears ourselves, we've been rather disappointed that the currency has not managed to progress much to the downside despite the widespread weakness in the USD prevailing in other majors. Nevertheless, we are still holding onto our shorts as there are 2 patterns which look to have activated on the hourly chart -suggesting further downside to come. The first is a bearish flag pattern with a target around 0.9480, and the second is a head and shoulders pattern which has a neckline around 0.9605 and a target at 0.9425. For those that missed the initial break-out, the overnight rebound has provided a second bite at the cherry, and selling on rallies back up towards 0.9600 remains our favoured strategy. Only support noted on the horizon is 0.9530 (former resistance now turned support), while resistance levels to watch on the topside now stand at 0.9687 (Friday's high), 0.9784 (11 Jan high), 0.9850 (12-13 Dec highs) and 1.0065 (1 Dec high).