EurUsd EURUSD's rally is definitely showing some signs of fatigue; the fresh disruption in Egypt boosted the USD yesterday afternoon causing the pair to slide lower from its 1.3861 highs, before finding some firmer ground ahead of 1.3750. We would not be surprised or concerned to see a deeper correction ensue after today's ECB conference; indeed it may be necessary to clear out some excess speculative longs before we can proceed toward the ongoing cup & handle pattern target of 1.4035. Expect first supports to come into play around 1.3767 (yesterday's low), 1.3685 (lower edge of the 2-week uptrend channel), 1.3540 (24 Jan low), 1.3518 (100-day moving average), 1.3397 (20 Jan low), and 1.3245 (17 Jan low). In spite of our shift to a neutral-to-mildly bearish stance in the short-term, we still hold a very bullish bias over the medium-and long-term. Key levels to beat on the topside will be the 1.3861 high seen early yesterday, (61.8% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876), 1.3975 (9 Nov high), the psychologically important 1.4000 level, 1.4085 (8 Nov high) and 1.4281 (4 Nov high).
GbpUsd GBPUSD's bulls are still looking strong, having managed to pierce 1.6230 resistance this morning (yesterday's high), and hit a new summit of 1.6244. Even a late afternoon round of USD buying could only suppress the pair as far as 1.6140 before willing buyers jumped in to drive the pair higher. Above us, resistance levels are few and far between. In fact, the next one is only eyed at 1.6300 (4 Nov high), with another long gap until 1.6460 (19 Jan 2010 high) and 1.6515 (7 Dec high). Given our views on EURUSD, there's the possibility of a deeper correction ahead for GBPUSD before another leg higher kicks in, but we would certainly be using these dips as an opportunity to buy. Noted levels below us are 1.6140 (yesterday's low), 1.6005-20 (sticky area of former resistance and lower edge of a 1-week uptrend channel), followed by the back side of our old downtrend at 1.5950. Other supports seen at 1.5823 (31 Jan low), 1.5751 (which caught the sell-off after the GDP release), and 1.5718 (13 Jan low).
UsdJpy After testing the lower edge of the current 3-week downtrend channel (around 81.30) earlier this week, USDJPY has managed to rebound somewhat -but not very far. Even the fresh violence in Egypt could only boost the USD as far as 81.85 against the JPY, so we are hoping for a bit more upside to present an opportunity to sell. Pockets of supply around 82.25 (31 Jan high), 83.00 (psychological resistance), 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. Should we break below yesterday's 81.31 low, next support levels are seen at 81.20 (lower edge of downtrend channel), 80.95 (31 Dec low), 80.53 (9 Nov low) and 80.24 (31 Oct low) -but then we have nothing but thin air until the all-time low from 1995 at 79.75.
UsdChf USDCHF has definitely been one of the pairs most acutely affected by yesterday's resurgence in the USD; sweeping the pair back through 0.9400 resistance to hit a high of 0.9442. For the time being, we maintain our view that another test of the 0.9301 all-time lows is on the cards, but this latest rally does make us wonder whether there might be a potentially bullish pattern forming on the hourly chart. Taking into consideration the last week's price action, we may be on our way to carving out an inverse head and shoulders pattern with a neckline at 0.9455 and a target at 0.9580.For the time being, we hope this scenario does not play out, but if it does, 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), and 0.9850 (12-13 Dec highs). Should we instead continue on our merry way lower, 0.9331 is the low water mark on this downtrend, but we'd prefer to wait for the 0.9301 level to break before we initiate any fresh short trades. Once 0.9301 has broken, the risk-reward profile would look far more attractive, and the entry levels less significant compared to the sprawling downside below.