EurUsd Middle East tensions have started to take their toll on EURUSD; with the pair retracing to lows of 1.3571. As discussed extensively last week, our bullish bias at this point would not be dented by a correction lower to clear out some stale positioning (after all, it's been a near 9 big-figure move off the 1.2874 lows in just 3 weeks). Expect first supports to come into play at 1.3540 (24 Jan low), 1.3420 (38.2% fibonacci retracement of the rally 1.2874 -1.3758), 1.3397 (20 Jan low), and 1.3245 (17 Jan low). Ultimately, we expect that once the position correction has played out, the broader rally will resume -driven primarily by a bullish cup & handle pattern that activated back on 18 Jan. As a reminder, the activation of that pattern began at 1.3330, and has a target at 1.4035. We were compelled to bank our profits at 1.3580 when the uptrend experienced its first breach, but would definitely be willing to re-load longs on a correction to 1.3400-50 levels. On the topside, next resistance is 1.3785 (22 Nov high), 1.3825 (10-11 Nov highs), and 1.3975 (9 Nov high).


GbpUsd GBPUSD is currently grinding gradually lower within a 1-week downtrend channel, and it's looking like another challenge on the day's low of 1.5823 will materialize soon. Should that 1.5823 weak support give way (as we think is likely given the broader slump in risk appetite) key support will be last Tuesday's low 1.5751 -which managed to catch the pair's sell-off after the GDP release. Below there we note potential support levels at 1.5718 (13 Jan low), closely backed up by 1.5810 (lower edge of current downtrend channel), 1.5585 (12 Jan low), 1.5515 (11 Jan low), 1.5474 (10 Jan low) and 1.5456 (200-day moving average). For the uptrend to resume, bulls will need to break above this downtrend ceiling around 1.5975 and preferably mount a credible challenge on 1.6010-20 (20, 21, 24 & 25 Jan highs). Beyond there, levels are seen at 1.6097 (19 Nov high), 1.6185 (9-12 Nov highs) and 1.6300 (4 Nov high).

UsdJpy Sure enough, USDJPY has slumped back towards the lower end of its 81.85 -83.20 range, and indeed managed to touch a low of 81.92 this morning (the first time it has dipped below 82.00 since Moody's downgrade of Japan's credit rating). Until a decisive break-out occurs one way or another, we will continue to trade the range on this pair -at the moment, we view current levels (around 82.00-10) as decent value for long entry; and would set a stop around 81.50. Should the bears manage to break lower through 81.85 (19 Jan low and range floor), watch for other pockets of demand at 81.70 (4 Jan European/US session low), 80.95 (31 Dec low), 80.24 (31 Oct low), before the all-time low from 1995 at 79.75. The target for our long trade would probably be 10-20 pips ahead of 83.00 psychological resistance. We also note next resistance levels lurk at 83.21 (27 Jan high) 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 on the first test.

UsdChf The 0.9390 print seen on 27 Jan remains the low water mark for USDCHF on this sell-off; as the bears have found it rather sticky down at these levels to push into clear new lows. For now then, we are entrenched in a 0.9390 -0.9480 range, and anticipate further choppy price action until a clear break-out precipitates. It's worth noting that the 3-week downtrend channel still in force, so our preference is to sell-on-rallies above 0.9450 rather than buy-on-dips. Only support noted on the horizon is that 0.9390 low, before we will be staring down the barrel of the all-time low 0.9301 seen on 31 Dec. Should the bulls have more success gathering momentum than the bears, resistance levels come in at 0.9480 (27 Jan high), 0.9520 (former support turned resistance), 0.9687 (14, 20 & 21 Jan highs), 0.9784 (11 Jan high), 0.9850 (12-13 Dec highs) and 1.0065 (1 Dec high).