EurUsd EURUSD has continued to recover its lost ground in the past 24 hours, hitting a high of 1.3609 this morning. Even yesterday's quick dip lower to 1.3462 has bolstered our bullish conviction -specifically because the low did not exceed Monday's low 1.3428. We feel it's very probable we extend past the 1.3609 highs in the coming sessions; after which point our focus will be on breaking this existing 2-week downtrend channel (currently the upper edge is seen at 1.3680) and then beating a path to 1.3744 (9 Feb high). Further levels are eyed at 1.3861 (2 Feb high), and 1.3896 (61.8% fibonacci retracement of 1.5145 to 1.1876), but our conviction is strong enough that we are holding on for a challenge of the psychologically important 1.4000 level. In the meantime we expect decent support to still lurk around 1.3537 (100-day moving average), 1.3428 (14 Feb low), 1.3397 (20 Jan low), and 1.3245 (17 Jan low).
GbpUsd Our bullish conviction was certainly challenged by an uncomfortable plunge yesterday morning to lows of 1.5988; but even Governor King's disappointing comments cannot change the fact that inflation is at 4.0% YoY in the UK and likely to prompt an earlier than expected rate hike. Surely the key vote of confidence in our view is that the sell-off couldn't reach the 11 Feb low 1.5965, and subsequent to the shake-out of weak longs, the pair has rebounded handsomely back above 1.6100. Of course, the back and forth debate about the path of rates is likely to make the price action choppy for a while to come (perhaps until the GDP revision on 25 Feb), so our job will be to maintain discipline and look for opportunities to buy on dips. Resistance levels remain sparse on the topside; the nearest one being 1.6185 (7 Feb high), then 1.6300 (4 Nov high), with another long gap until 1.6460 (19 Jan 2010 high) and 1.6515 (7 Dec high). Buyers are anticipated to start appearing towards 1.6000, with further levels eyed at 1.5965 (11 Feb low), 1.5823 (31 Jan low), 1.5751 (which caught the sell-off after the first GDP release), and 1.5718 (13 Jan low).
UsdJpy Broader USD weakness stalled USDJPY's rally (coming to a halt at yesterday's high 93.98); and despite the absence of a meaningful retracement lower, the pair has managed to break the lower edge of its 2-week uptrend channel around 83.70. For now at least the pair looks to have stabilized around 83.50, but given the break of the uptrend channel, we're wary of a further liquidation of weak longs. On the downside, first support will be 83.10 (14 Feb low), 82.20 (9 Feb low), 81.77 (8 Feb low) and 81.13 (4 Feb low). Should the bulls recover and manage to resume an upward trajectory within a broader uptrend, then watch for resistance around 84.00 and 84.40. That 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. Next levels beyond come in at 85.40, 85.95 and 86.90.
UsdChf Fresh lows for USDCHF today (low so far 0.9554), albeit after a quick test of 0.9740 resistance yesterday which shook out some of the weaker positioning in the market. First support level remains 0.9555 (9 Feb low which caught the sell-off today), followed by 0.9525 (8 Feb low). Should we slump lower then watch for next levels at 0.9395 (3 Feb lows), 0.9331 (low water mark for this sell-off which was printed on the 2 Feb), and the all-time low of 0.9301. On the topside, sellers will probably start to precipitate around 0.9740 (yesterday's high), and the key resistance remains at 0.9784 (11 Jan high). Above there, we'd be looking to print new 2011 highs, as the following resistance levels have not been touched since late 2010. The first of these is 0.9850 (12-13 Dec highs), 0.9915 (8 Dec high) and 0.9950 (3 Dec high).