EurUsd EURUSD enjoyed an impressive burst higher on Friday afternoon, and in turn we have seen the pair break its 3-week downtrend channel and hit a high of 1.3715. From here, the next levels to target will be 1.3744 (9 Feb high), 1.3861 (2 Feb high), and 1.3896 (61.8% fibonacci retracement of 1.5145 to 1.1876). We remain confident in our medium term view that EURUSD has the momentum and support for an eventual challenge on the psychologically important 1.4000 level, so will be looking for opportunities to buy on dips. First levels of support on the downside are eyed at 1.3645 (back side of former downtrend channel), 1.3537 (which is both the 17 Feb low and 100-day moving average), 1.3460 (15 & 16 Feb low), 1.3428 (14 Feb low), 1.3397 (20 Jan low), and 1.3245 (17 Jan low).
GbpUsd GBPUSD continues to look well-bid after last week's rollercoaster of UK releases and BoE comments; and just this morning has pushed to fresh highs of 1.6263. With the BoE minutes due Wednesday and second reading of Q4 GDP scheduled on Friday, we're certainly expecting the pair to keep creeping higher, and recommend buying on dips in a similar fashion to our strategy for EURUSD. Resistance levels remain sparse on the topside; the nearest one is 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 1.6185 (where former resistance now acts as support), then 1.6000 psychological support, 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 We still think that the recent USDJPY price action looks like a potential head and shoulders pattern on the hourly chart, especially after Friday's short rally and subsequent collapse appeared to satisfy the requirement for a second shoulder to form. At the moment, support around the neckline between 83.00-10 has prevented the pattern from becoming activated, but should we see a clean break lower then the target lies at approximately 82.20 (calculated as the height of the head subtracted from the neckline). This target is particularly elegant because it coincides almost precisely with the 9 Feb low, and there are no other clear-cut support levels in between that we can see that would hinder progress to 82.20. Should the bears manage to overshoot the target, next supports are noted at 81.77 (8 Feb low), 81.13 (4 Feb low), 80.94 (31 Dec and 2 Jan lows) 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 USDCHF is proving to be the currency pair most acutely affected by bouts of risk aversion, and with fresh turmoil in northern Africa over the weekend we have seen the pair drop to lows of 0.9432. Next support is now 0.9395 (3 Feb lows), followed by 0.9331 (low water mark for this sell-off which was printed on the 2 Feb), and the all-time low of 0.9301. Given the huge significance of that 0.9300 level, we expect buyers lurking there to slow the descent considerably as we approach, but should the level break then the only course of action will be to add to shorts and hold on tight for a plunge into the uncharted waters below. On the topside, sellers will probably start to precipitate around 0.9540 (Friday's high), 0.9600 (17 Feb high), and 0.9740 (16 Feb high), while key resistance remains at 0.9784 (11 Jan high).