EurUsd There's been a big retracement lower for EURUSD in the Asian session, with the pair slumping deeply back into the 3-week downtrend channel, and at the time of writing we're putting pressure on the important 1.3534-7 support (100-day moving average & 17 Feb low). Next levels of support from here are 1.3460 (15 & 16 Feb low), 1.3428 (14 Feb low), 1.3397 (20 Jan low), and 1.3245 (17 Jan low). With the fate of the current downtrend channel not clear at all (clearly broken at the start of the week, but the bulls unable to hold outside it for more than a day), we believe its worth holding onto our longs for the time being, and still see dips towards 1.3460 as good value for long entry. Ultimately, we are looking for a move to 1.3744 (9 Feb high), 1.3861 (2 Feb high), and 1.3896 (61.8% fibonacci retracement of 1.5145 to 1.1876). Overall, 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.
GbpUsd The drop off in risk appetite has dragged GBPUSD off its 1.6264 highs (see on Friday), and taken us back below 1.6150 levels. Nevertheless, the 1-month uptrend channel is still very much in play and tomorrow's BoE minutes could provide some bullish catalysts, so we view dips as opportunity for going long, rather than an omen of a new downtrend. Buyers are anticipated to start appearing towards 1.6075 (17 Feb low), 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). 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).
UsdJpy Choppy price action for USDJPY traders overnight after Moody's downgrade of Japan's credit outlook sent the pair on an ugly spike higher. 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. Thus far, we have seen one clear break below 83.00-10 neckline so have gone short and are looking for a target below around 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, but we will certainly feel more confident once we have seen a dip below the overnight low 82.84. 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) If the bulls recover and manage to resume an upward trajectory within a broader uptrend, then watch for resistance around 83.55 (18 &21 Feb highs), 84.00 (roughly the 16 Feb high) 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.
UsdChf The continuing mood of risk aversion is ensuring that USDCHF stays heavy, and this morning we are pointing at another test of the week's opening low 0.9432. Should we break lower, 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).