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

Sterling strength seems to be on the cards with GBP/JPY and GBP/USD looking likely to break into a bullish phase.

A pound atop a US dollar note
Source: Bloomberg

EUR/USD turns lower in range continuation

EUR/USD has turned lower once more from the $1.129 resistance point. This range has held for over two weeks now and the selloffs generally hold greater consistency and clarity than the rallies. That being said, the downside targets have not been as reliable, and I am hesitant to expect too much from this selloff. Nevertheless, I to expect further downside to come and $1.121 seems like a likely initial support level to come into play.

With the MACD and stochastic both turning lower, the momentum is clearly turning in favour of the sellers and this corroborates my bearish view. A break above $1.129 would be the clear event that would bring about a more bullish view.

EUR/USD chart

GBP/USD showing signs of a strong recovery

The GBP/USD pair has broken higher in a convincing manner, following some indecision at the lower end of this clear bottoming-out formation. The previous resistance level of $1.5241 has provided support this morning, and I expect to see the pair reach $1.5289 in the near future. This rounded bottom in GBP/USD leads me to believe we will have a decent amount of upside to come and therefore I am bullish as long as the price remains above $1.5223. Near-term resistance come in around $1.5289, $1.533 and a longer-term level to watch is $1.5467.

GBP/USD chart

GBP/JPY resurgence from long-term trendline

GBP/JPY is showing signs of a resurgence from an ascending trendline that began a year ago (October 2014). The market is moving sharply higher in the current candle following a retracement lower and the signs are pointing towards a strong resurgence in this market which would correspond with a similar one I expect in GBP/USD. The clear creation of new highs and higher lows points towards a move back to ¥184.42 in the near future. Be aware that this market is relatively choppy and volatile, yet while we remain above ¥182.50, the likeliness is that we will continue to create new highs.

GBP/JPY chart

NZD/USD spikes higher, but a retracement could soon be due

Yesterday’s bullish view of NZD/USD was clearly well warranted, with the pair spiking over 120 points since the midday low. Clearly this trend is in place for possible further gains, yet I am aware that we are likely to see another retracement or consolidation phase soon. Much like that seen yesterday and last Thursday, a retracement or consolidation is natural within a nice trend and often is seen as a good place to either enter or increase holdings.

For now, I am looking at the stochastic oscillator which is around the general area which the indicator tops out, while lows are increasing to create a tightening triangle formation. The only realistic break would be lower and I would expect this to bring selling for NZD/USD. This may be short term but I personally would be hesitant entering now, and instead am watching for a retracement in the near future.

NZD/USD chart

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