FX snapshot – EUR/USD, GBP/USD, NZD/USD, USD/JPY

GBP/USD weakness points to a possible reversal for EUR/USD, which would complete a picture of dollar strength across the board.

Yen notes in a pile
Source: Bloomberg

EUR/USD on the rise again following retracement

The EUR/USD rise seen throughout this week appears to be back on the cards today, following a pullback to the 38.2% Fibonacci retracement at $1.0962. Typically trending markets will switch between deep retracements (i.e. the 61.8% Fibonacci retracement pullback on Wednesday) and shallow ones (should $1.0962 hold).

Given the bullish response to the massive $1.0819 level, I do expect us to see further upside to come. The inability to continue posting new highs and higher lows would mean the writing is on the wall for a return to $1.0819, which if broken would lead to a projected target of $1.017. For now, we do continue to move higher, and I am bullish in the short term as long as the price remains above $1.092 and $1.0869. The next resistance point to the upside is likely to come in around $1.1045.

Spot FX EUR/USD chart

GBP/USD breaking below broadening formation

Let me prelude this by saying that what is happening in the GBP/USD price is a warning sign for EUR/USD, as the two are largely correlated and there is little reason from a fundamental standpoint to say that the correlation will weaken today of all days.

This morning is seeing the price break to the downside following a clear respect to the broadening formation in play over the past nine days. This move means that not only are we having lower lows, but the likeliness of a lower high is significantly increased. The most important support level to watch out for is $1.5447, which if broken would point towards a longer-term bearish trend in play. However for now, I do expect a move down to $1.5447 as long as the price remains below the descending trendline. How it responds to that would then determine what we see from there.

Spot FX GBP/USD chart

NZD/USD sells off from trendline and approaches crucial support level

Yesterday’s selloff from trendline resistance gave us a bearish signal, which pointed towards a continuation of the clear NZD/USD downtrend in play for recent months. The move below the near-term ascending trendline is one fairly unimportant bearish signal. Yet the most important signal would be a move below $0.656. Should we see a move below $0.656, this would be the bearish signal for me that we are going to resume the recent downtrend. I am bearish, yet see this as the prerequisite for me to say with confidence that we will see $0.65 again in the near future.

Spot FX NZD/USD chart

USD/JPY triangle looks like temporary consolidation

The USD/JPY triangle we are currently watching is a clear period of short-term consolidation, coming off the back of a 23.6% retracement earlier this week. I personally believe we will break to the upside for a resumption of the bullish trend. However, I will await the move first, and thus I am bullish above Y124.17 or bearish below Y123.67. Note that any bearish sentiment would be purely short term in nature as I am bullish overall for this pair. 

Spot FX USD/JPY chart

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