EurUsd EURUSD's retracement after the weekend unrest in Egypt proved to be very short-lived, with the pair only dipping as far as 1.3570 before willing buyers swept the pair back above 1.3700 (to hit a high of 1.3758). We are still looking for the a bullish cup & handle pattern that activated back on 18 Jan to resume its path to the 1.4035 target, but in order to do so, the bulls must manage to break through 1.3758 (yesterday's high and also today's peak). If we can do that, then look for the path to be cleared for a trip to next resistance at 1.3785 (22 Nov high), 1.3825 (10-11 Nov highs), and 1.3975 (9 Nov high). Nevertheless, the brevity of yesterday's correction does make us ponder whether a deeper shake-out of stale longs is necessary before more upside can occur. Should the bulls fail to clear 1.3758, then we could be on track to carving out a double top formation with a neckline at 1.3570 and an approximate target of 1.3380. 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). Personally, we'd be willing to re-load longs on a correction towards 1.3400 levels.
GbpUsd GBPUSD support around 1.5825 managed to hold its ground well yesterday, as has provided a platform for a rally all the way up to highs of 1.6079. This emphatic move has smashed through the ceiling of the 2-3 week downtrend channel around 1.5975, and moreover has cleared the formerly stubborn resistance around 1.6010-20 (20, 21, 24 & 25 Jan highs). From here we are looking at a re-test of the next resistance level 1.6097 (19 Nov high); but most of the hurdles eyed above are some way off; first up is 1.6185 (9-12 Nov highs), followed by 1.6300 (4 Nov high) and 1.6460 (19 Jan 2010 high). Like other risk correlated trades, buyers on dips abound, expect that formerly stubborn resistance at 1.6010-20 to now represent the first area of support, followed by the back side of our old downtrend at 1.5965. Other supports seen at 1.5823 (yesterday's low), 1.5751 (which caught the sell-off after the GDP release), and 1.5718 (13 Jan low).
UsdJpy The grind lower continues for USDJPY, which has now breached the lower end of its 81.85 -83.20 range, briefly touching a low of 81.77. Thus far however, downside momentum does not appear to have gathered any pace, and the bears are being contained by support at 81.70 (4 Jan European/US session low). Those who have gone long playing the range are therefore still in the game for now, but should we get a clear break below 81.70 today (yesterday we proposed 81.50 as tidy stop) then next levels are not seen until 80.95 (31 Dec low), 80.24 (31 Oct low), and the all-time low from 1995 at 79.75. Should the bulls recover, expect resistance to start precipitating around 83.00, with big levels noted further up 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 Fresh new lows for USDCHF yesterday, as we crept down to 0.9369 and drifted ever closer to a challenge of the all-time low 0.9301 (seen 31 Dec). A number of different downtrend channels are in full force so barring any shock announcements from the SNB's Jordan later this afternoon, we expect a further push to the downside to materialize. Selling on rallies would be the best advice, but really, we doubt that the rallies will be that long-lived from here. First resistance levels come in at 0.9455 (upper edge of 1-week downtrend channel), 0.9480 (27 Jan high), 0.9505 (upper edge of 3-week downtrend channel), 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).