FX levels to watch – EUR/USD, GBP/USD, USD/JPY, USD/CAD

Sterling, euro and yen regain ground against the dollar this morning following recent selling pressure.

Joshua Mahony
Market Analyst, London

2016-03-03T09:38:19+0000

Source: Bloomberg

EUR/USD back to trendline resistance

EUR/USD rallied late into yesterday’s session, bringing price back to a trendline dating back to late February. There is no doubt that this sell-off has lost a lot of its steam of late, yet with expectations of further easing at the European Central Bank next week, there is a good chance we could see further downside.

For now, the pair continues to marginally make lower highs. Thus while the bearish view remains, an hourly close above trendline and $1.0881 resistance would point towards some form of retracement higher, with $1.0911 the next resistance level in view.

Alternately, another move lower would look towards support levels at $1.0853 and $1.0826.

eurusd

GBP/USD pulls back within recovery

GBP/USD is selling off this morning, following on from a very strong start to the month. The break through $1.4042 marks the completion of a double-bottom formation and this bullish move points towards further gains.

However, with the stochastic massively overextended to the upside, there could be some form of retracement lower first. We would need a move below $1.3904 to clearly return to the downtrend that has dominated recent months.

Thus any further downside would be looking towards $1.4042 and $1.4000 as the key near-term support levels.

Should we see further upside, $1.4168 and $1.4230 are the main resistance levels to note.

gbpusd

USD/JPY falling short

USD/JPY failed to break higher with any gusto yesterday, instead breaking back below ¥113.74 in a bearish signal which led to a sharp depreciation for the pair.

The overnight rally appears to be falling short of yesterday’s highs, instead pulling back from the ¥114.18 peak from 1 March. The stochastics are well overbought and there is clearly a potential for further downside in line with this. Given that we have now set a new low and lower high, a closed hourly candle below ¥113.74 should give us another decent move lower for the pair.

In which case, another return to yesterday’s ¥113.20 low seems likely. However, should ¥113.74 hold, then we would be looking for resistance levels of ¥114.18 and ¥114.55.

usdjpy

USD/CAD fails to set new low

Yesterday’s late sell-off in USD/CAD fell short of the C$1.3386 support level set on Tuesday, with the pair starting to regain ground this morning. There is a clear double-bottom neckline resistance at C$1.3500 which would change the sentiment of this pair.

Thus below C$1.3500, the bearish view remains with support levels of C$1.3405 and C$1.3386. However, a closed hourly candle above v1.3500 would provide us with a more bullish view, where resistance levels of C$1.3552 and C$1.3587 come into play.