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FX Levels to Watch: GBP/USD, EUR/USD, USD/JPY, USD/CAD

Cable continues to look towards $1.40, while the euro is being hit hard ahead of the European Central Bank meeting next week.

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Euro notes
Source: Bloomberg

GBP/USD recovers some strength
We did just about get a lower low in cable yesterday, but it was only a modest push downwards. Now, the pair appears to have recovered some strength, even if PMI readings could provide a potential hiccup.

If the price does recover $1.40 then that would be a bullish development, coupled with a bullish crossover in stochastics on the daily chart. A turn higher in the daily RSI is also adding to the impression of a short-term bottom being in place. We would look towards $1.4080 and then $1.42 in the event of an extended move higher.

EUR/USD looks bearish
Yesterday’s inflation data has rather spoiled the party for euro bulls, but we can still expect further downside for the pair, as expectations of ECB easing move up a gear. The default move appears to be selling the rallies, as and when these appear, with targets down towards $1.08 and $1.07, at least until the ECB meeting itself. We would need to see sustained action above $1.10 to cancel out the bearish scenario here.

USD/JPY receives fresh upward pressure
Despite a drop lower yesterday it looks like there is fresh upward pressure for the pair. A close above Friday’s high at ¥114 would be the signal for a test of the mid-month high around ¥115, which would then signal a move on towards the 50-day Simple Moving Average at ¥117. Support is likely around ¥112 and then at the key low of ¥111.

USD/CAD
​The pair continues to hold above the C$1.3450 support level that marked resistance at the end of September last year. As a result, the downside case seems limited unless and until we see a close below this level. In the event of a bounce we look towards C$1.3650, and then on to the late February highs around C$1.3850. 

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